Treatise 

on  Comprehensive 

Accounting  Methods  Adapted  to 

Shoe  Manufacturing  and 

Other  Industries 


By  FREDERIC  L.  SMALL 

Of  Small,  Nichols    &  Company,  Inc. 

Industrial  Engineers  and  Accountants 

Boston,  U.  S.  A. 


Published  by 

L.  &  S.  Printing  Company 
Boston,  U.  S.  A. 


Copyright,   1914, 
By  Frederic  L.  Small 

British  and  International 
Copyright  Secured 

547 


**;  »••***  • 


THE  TUDOB  PRESS 
BOSTON 


CONTENTS 


PART  1 

CHAPTER  1.  Opening  9 

2.  Universal  Accounting  13 

3.  Classification  of  Accounts  19 
"         4.  Explanation  of  Estimates  25 

5.  Detailed  Estimates  37 

6.  Receiving  and  Store  Department  Cost 

Accounting  45 

7.  Detailed  Reports  71 

8.  Percentage  Estimates  85 

9.  Accounting  and  Auditing  89 

10.  Machinery  Inventory  and  Depreciation      95 

11.  Form  Book  101 


PART  2 

CHAPTER  12.  Manufacturing  Plants 

13.  Plan  and  Chart  of  Organization 

14.  Functions  of  Departments 

15.  Production  System 

16.  Cutting  Department 

17.  Sole  Leather  Department 

18.  Making  Department 

19.  Cutting  Efficiency 

20.  Unit  Area  of  Production 

21.  Some  Printed  Forms 


105 
109 
119 
135 
153 
169 
177 
181 
193 
197 


Parti 
Accounting  and  Costs 


CHAPTER  1 
OPENING 

IT  has  always  appeared  to  the  author  that  very  few  shoe 
manufacturers  have  studied  the  history  of  shoe  manu- 
facturing or  have  looked  very  far  into  its  future. 
Those  who  have  will  agree  with  me  that  compared  with 
other  manufacturing  industries  some  of  the  methods  usually 
practised  in  producing  shoes  are  crude  and  unscientific. 

Great  changes  are  taking  place  constantly, —  changes 
which,  through  the  efforts  of  trained,  scientific  men  and 
the  use  of  superior  machinery,  result  in  reducing  the  cost 
of  constructing  shoes.  In  the  years  to  come,  the  largest 
concerns  of  to-day,  active  in  producing,  jobbing  and  retailing 
shoes,  will  be  looked  back  upon  as  infant  industries. 

Since  the  publication  of  "Organizing  a  Shoe  Factory," 
great  strides  have  been  taken  by  many  manufacturers. 
They  have  introduced  scientific  methods  of  handling  mate- 
rials and  more  humane  ideas  regarding  employees.  They 
have  realized  that  in  order  to  secure  the  quality  and  quantity 
of  work  which  they  desire,  it  has  become  necessary  to  use 
some  system  other  than  that  of  labor  driving.  They 
realize  also  that  in  the  past  there  has  been  tremendous  waste 
of  material,  and  they  are  making  efforts  to  prevent  such 
waste.  They  know  that  the  cost  of  distribution  or  selling 
is  far  too  great,  but  as  yet  it  has  been  impossible  to  reduce  it 
as  low  as  it  should  be. 


10    COMPREHENSIVE  ACCOUNTING  METHODS 

During  the  past  ten  years  much  has  been  said  and 
written  about  the  so-called  "Scientific  Management  "  which 
would  lead  one  to  believe  that  the  exponents  of  this  sup- 
posedly newly  discovered  science  had  found  a  panacea  for 
all  the  ills  and  grievances  to  which  manufacturing  industries 
were  subjected.  Many  of  the  devotees  of  this  new  science 
have  criticized  and  condemned  the  work  of  so-called  "Sys- 
tematizers"  and  "Cost  Accountants."  From  the  stand- 
point of  the  writer  there  is  no  question  but  that  the  work 
of  some  systematizers  and  cost  accountants  is  open  to  severe 
criticism.  However,  let  us  look  at  the  subject  of  cost  ac- 
counting applied  to  a  shoe  manufacturing  industry  in  its 
true  light.  Shoe  manufacturing  as  ordinarily  conducted 
is  a  contracting  business,  and  the  inability  to  recognize  this 
condition  has  been  the  cause  of  the  failure  of  a  great  many 
shoe  factory  cost  systems. 

Harrington  Emerson  has  defined  efficiency  as  the  rela- 
tionship between  what  is  and  what  ought  to  be.  This  defini- 
tion is  very  good  and  is  directly  in  line  with  what  the  writer 
believes  cost  accounting  should  show. 

In  no  instance  that  has  come  to  the  attention  of  the  writer 
has  a  cost  system,  except  the  one  herein  described,  done 
anything  more  than  to  furnish  a  mass  of  statistics  showing 
what  has  been  accomplished.  It  has  been  the  practice  of 
most  cost  accountants  to  devise  cost  systems  showing  what 
has  been  done  during  a  past  period  as  compared  with  some 
previous  period  or  periods,  merely  showing  improvements 
or  retrogressions.  Such  cost  systems  are  all  very  well  as 
a  matter  of  statistics  and  the  figures  are  sometimes  very 
interesting;  but  what  do  they  show  as  compared  with  what 
they  ought  to  show?  In  other  words,  if  from  such  a  mass 
of  statistics  we  derive  the  fact  that  a  manufacturing  concern 
has  made  a  profit  for  a  period,  say  of  $10,000,  is  there  any- 


COMPREHENSIVE  ACCOUNTING  METHODS     11 

thing  to  show  that  it  should  or  should  not  have  made  a 
profit  of  $20,000  during  the  same  period?  It  is  this  lack  in 
cost  systems  of  showing  what  concerns  have  done  as  com- 
pared with  what  they  should  have  done  that  has  disgusted 
so  many  efficiency  engineers  and  made  them  conclude  that 
cost  systems  were  of  comparatively  little  value.  This  con- 
clusion has  undoubtedly  been  reached  because  of  a  mis- 
conception of  what  a  real  cost  system  actually  is.  As  a 
matter  of  fact,  the  basis  of  the  so-called  scientific  manage- 
ment and  the  basis  of  a  true  cost  system  are  identical,  the 
difference  being  that  a  true  cost  system  not  only  includes 
the  features  covered  by  scientific  management  but  goes  much 
farther.  The  so-called  scientific  management  first  sets 
standards  and  then  endeavors  to  live  up  to  those  standards. 
So  should  the  cost  system  as  applied  to  the  shoe  manu- 
facturing industry. 

In  many  industries  scientific  management  has  accom- 
plished some  apparently  great  feats,  but  in  most  part  these 
feats  have  consisted  in  inducing  labor  to  perform  greatly 
increased  tasks  for  comparatively  small  increases  in  earnings. 
If  we  should  apply  the  same  tactics  to  the  shoe  business, 
we  might  make  a  considerable  saving  in  labor  cost,  but  the 
labor  cost  of  a  pair  of  shoes  is  not  the  item  of  prime  impor- 
tance. A  10%  saving  in  material  is  about  equal  to  a  25% 
saving  in  labor  when  the  cost  of  all  shoes  is  averaged. 

In  order  to  know  what  degree  of  efficiency  is  being  at- 
tained in  an  entire  business,  it  is  first  necessary  to  set 
standards  and  to  keep  records  showing  how  near  to  these 
standards  the  business  as  a  whole  is  operated. 

The  writer  realized  many  years  ago  that  cost  accounting 
as  ordinarily  applied  to  the  shoe  manufacturing  business 
fell  far  short  of  accomplishing  the  purpose  for  which  it  was 
designed,  and  he  has  for  many  years  treated  the  proposition 


12     COMPREHENSIVE  ACCOUNTING  METHODS 

of  cost  accounting  in  exactly  the  same  manner  that  the 
devotees  of  the  newly  discovered  scientific  management 
treat  their  subjects. 

Realizing  the  fact  that  the  majority  of  shoe  factory 
cost  accounting  systems  were  entirely  inadequate  and  un- 
satisfactory, it  has  for  years  been  the  author's  ambition 
to  write  a  book  on  this  subject,  outlining  his  views  and 
explaining  in  detail  his  methods.  Lack  of  time  has  pre- 
vented the  carrying  out  of  this  desire,  and  he  now  takes 
great  pleasure  in  placing  before  the  public  this  book,  which 
illustrates  the  possibilities  of  a  complete  cost  system  and 
which  also  will  serve  as  a  basis  of  a  universal  accounting 
system  for  all  shoe  factories.  In  other  words,  the  principles 
of  the  methods  herein  shown  are  of  universal  application, 
only  a  few  of  the  details  being  found  to  differ  in  any  par- 
ticular case. 

In  1910,  the  writer  published  a  little  book  called  "Or- 
ganizing a  Shoe  Factory,"  with  the  idea  of  stimulating 
an  interest  in  manufacturers  to  be  more  efficient  themselves 
and  to  get  greater  efficiency  in  their  business.  In  a  few 
cases  the  purpose  of  this  little  book  was  not  understood 
and  some  readers  were  disappointed  not  to  find  working 
plans, —  both  for  the  mechanical  and  accounting  divisions 
of  their  business. 

Without  criticizing  too  severely  the  majority  of  the 
methods  at  present  employed,  the  present  book  is  intended 
to  show  that  not  only  the  great  majority  of  manufacturers 
spend  their  money  for  very  poor  accounting,  but  that  they 
can,  if  they  so  desire,  have  an  accounting  system  which  is 
efficient  and  which  will  at  all  times  show  them  not  only 
the  condition  in  which  their  business  is,  but  also  the  degree 
of  efficiency  which  is  maintained. 


CHAPTER  2 
UNIVERSAL  ACCOUNTING 

EVERY  manufacturing  concern  should  have  an  efficient 
accounting  system.  Many  have  found  their  systems 
inefficient  and  have  become  dissatisfied,  but  the 
managers  of  these  concerns,  not  being  accountants,  have  been 
unable  to  make  the  accounting  systems  what  they  desired. 
Many  so-called  accounting  systems  are  mere  bookkeeping 
systems  introduced  by  some  business  college  graduate,  or 
perhaps,  by  some  bookkeeper  of  considerable  experience. 
They  are  usually  inefficient,  and  if  the  other  portions  of  the 
business  were  operated  as  inefficiently,  the  concern  would 
be  put  out  of  business.  Habit,  as  much  as  anything,  has 
been  responsible  for  this  inefficient  accounting. 

In  planning  accounting  systems,  the  lack  of  standardiza- 
tion of  accounts  is  continually  felt  by  statisticians  in  any 
industry  that  has  been  investigated.  Public  service  cor- 
porations and  banks  have,  to  some  extent,  been  forced  by 
commissions  and  accountants  to  adopt  uniform  methods  of 
bookkeeping.  It  would  be  an  excellent  thing  if  every  in- 
dustry could  be  persuaded  to  adopt  standardized  methods 
of  accounting.  It  would  not  only  be  valuable  for  individual 
plants,  but  would  greatly  enhance  the  value  of  all  public 
statistics,  which  to-day  are  in  many  cases  useless  because 
of  lack  of  uniformity. 

Shoe  manufacturing  is  no  exception  to  the  rule.     There 

13 


14    COMPREHENSIVE  ACCOUNTING  METHODS 

has  never  been  any  standard  of  classification  of  accounts 
by  which  comparisons  could  be  readily  and  accurately  made. 
Manufacturers  frequently  get  together,  compare  notes,  and 
differing  widely  on  many  items,  wonder  at  the  cause.  Had 
they  a  clear  conception  of  the  three  fundamental  items 
that  make  up  the  cost  of  their  product  and  had  the  detail  of 
those  items  been  subdivided  in  their  books  of  account  in  an 
identical  manner,  they  could  compare  notes  far  more 
intelligently. 

To  illustrate  this  point,  the  writer  will  cite  an  experience 
in  Lynn. 

Two  manufacturers  were  discussing  the  question  of  costs. 
One  was  a  director  in  a  Lynn  bank.  The  other  was  seeking  a 
loan  from  that  bank.  The  bank  director  finally  asked  what 
the  other  man  used  as  an  estimate  for  findings  cost,  and  when 
told  10  cents  per  pair,  exclaimed,  "You  can't  borrow  any 
money  at  my  bank  if  that  is  all  you  know  about  figuring 
shoes." 

The  man  seeking  the  loan  was  not  satisfied  and  demanded 
to  know  how  much  he  should  estimate,  and  was  told  20  cents 
per  pair. 

Each  thought  there  was  something  radically  wrong  with 
the  figures  of  the  other  and  each  was  justified  in  so  thinking, 
for  to  neither  was  the  cost  of  findings  10  cents  per  pair. 
The  man  using  the  ten-cent  estimate  was  more  nearly  correct, 
for  a  detailed  list  of  costs  used  by  the  bank  director  manu- 
facturer included  lasts,  machinery  and  other  items  which 
did  not  belong  in  findings  cost. 

Almost  every  shoe  manufacturer  has  compared  notes 
with  others  and  has  observed  the  varying  results  produced 
by  different  accounting  systems.  This  book  is  consequently 
offered  as  illustrating  a  basis  of  a  universal  accounting  sys- 
tem for  shoe  manufacturers,  as  stated  in  the  previous  chapter. 


COMPREHENSIVE  ACCOUNTING  METHODS      15 

The  system  described  in  this  work  is  efficient,  it  is  not 
complicated  and  can  be  operated  by  any  bookkeeper  of 
ordinary  ability.  It  is  based  upon  the  principle  of  double 
entry  bookkeeping,  which  is  —  for  every  debit  there  must 
be  a  corresponding  credit.  A  debit  is  always  either  an  asset 
or  an  expenditure.  A  credit  must  be  either  a  liability  or 
an  income,  the  result  of  the  investments  made  in  assets  and 
expenditures. 

The  system  herein  described  and  illustrated  does  not 
separate  the  regular  bookkeeping  from  the  cost  work,  but 
inaugurates  the  cost  work  as  a  part  of  the  general  accounting. 
The  reason  for  so  doing  is  that  the  profit  and  loss  figures 
shown  in  reports  of  costs  and  the  balance  sheet  of  the  same 
date  must  correspond,  whereas,  in  other  systems  not  so  com- 
bined, the  accuracy  of  the  cost  accounting  reports  cannot  be 
proved,  there  being  no  balance  sheets  made  at  corresponding 
dates. 

The  system  is  perpetual,  inventories  being  constantly  \\   ^ 
taken.     The  necessity  of  closing  down  factories  at  fixed    ^fr 
dates  once  or  twice  a  year  with  the  extra  burden  of  cost 
from  loss  of  production  and  the  clerical  expense  of  figuring 
the  completed  inventory  is  thus  avoided. 

A  well-organized  factory  with  such  a  system  as  is  de- 
scribed may  at  all  times  be  compared  to  the  ocean  liner  in 
perfect  order.  Without  such  a  system,  the  factory  is  like 
the  ocean  liner  in  a  thick  fog  with  the  compass  lost. 

It  may  cost  a  trifle  more  to  operate  this  system,  but  this 
additional  expense  is  saved  in  other  places,  and  its  true  worth 
cannot  be  estimated.  The  satisfaction  of  always  knowing 
the  exact  results  of  the  business  is  of  inestimable  value. 

In  the  cost  system  as  outlined,  two  types  of  estimates 
are  shown;  one,  very  simple  but  efficient,  designed  to  keep  a 
close  knowledge  of  a  business  by  means  of  a  percentage  sys- 


16     COMPREHENSIVE  ACCOUNTING  METHODS 

tern  based  upon  averages;  the  other,  a  more  complete  and 
accurate  system,  in  which  the  condition  of  the  business  in 
detail  is  shown  at  stated  periods.  The  units  of  time  used  are 
one-half  day,  one  day,  one  week,  periods  of  either  four  or 
five  weeks,  and  a  period  of  six  months  or  twenty-six  weeks. 

In  the  classification  of  accounts  given  in  the  following 
chapters,  purchases  of  all  kinds  are  included  but  no  detail 
of  arrangement  is  shown.  Controlling  accounts  should  be 
kept  in  a  private  ledger  with  auxiliary  ledgers  provided  to 
show  details.  It  is  also  advisable  to  keep  a  distribution 
ledger  to  show  details  of  labor  and  expense  (intangible  things), 
all  tangible  things  being  accounted  for  in  detail  by  the  store 
department.  The  list  of  accounts  shown  can,  with  some 
slight  changes  in  details,  be  made  standard  for  all  factories. 
The  three  prime  items  of  cost  are  Merchandise,  Labor  and 
Expense. 

In  Merchandise  are  included  all  materials  that  go  into 
shoes,  are  necessary  for  their  construction  or  go  away  with 
them.  For  example,  upper  and  sole  leather,  linings,  lasting 
tacks,  cartons  and  cases. 

The  merchandise  account  may  be  separated  into  five 
general  divisions:  upper  department  materials,  sole  depart- 
ment materials,  supplies,  regular  findings  and  excess  findings. 

In  upper  department  materials  will  be  included  all 
leather,  cloth,  etc.,  that  is  used  in  preparing  the  uppers  of 
shoes  for  the  stitching  room. 

In  the  sole  department  materials  will  be  found  all 
leather  and  substitutes  for  leather  which  are  used  to  make 
up  the  bottoms  of  shoes. 

In  supplies  will  be  included  certain  items  usually  small 
in  value  but  which  can,  nevertheless,  be  figured  as  specific 
costs  which  change  in  different  shoes. 

Regular  findings  will  include  all  of  that  great  class  of 


COMPREHENSIVE  ACCOUNTING  METHODS      17 

articles,  the  cost  of  which  is  small  in  some  departments 
and  quite  large  in  others,  but  which  are  necessary  to  the 
construction  of  shoes  or  go  away  with  them,  the  cost  of 
which  applies  equally  to  all  shoes. 

The  excess  findings  will  include  other  items  of  merchan- 
dise of  the  same  nature  as  regular  findings  but  which  are 
used  on  some  shoes  in  addition  to  the  regular  findings. 

Labor,  the  second  prime  item  of  cost,  will  be  divided  into 
two  classes  —  Productive  and  Non-Productive. 

Productive  labor  will  include  only  those  employees 
actually  working  on  shoes,  and  it  will  be  further  divided  into 
departments  and  into  Day  and  Piece  labor. 

Non-Productive  labor  will  include  all  employees  (except 
salesmen)  who  are  not  actually  employed  in  producing 
shoes,  and  will  be  further  divided  into  Manufacturing  and 
Distributive  labor. 

Manufacturing  labor  will  be  divided  into  Executive, 
Superintendence,  Office  and  General. 

Distributive  labor  will  be  divided  into  Executive  and 
Office. 

Expense  will  be  separated  into  two  main  divisions. 
The  first  division  will  include  expenses  not  absolutely  neces- 
sary to  either  the  manufacturing  or  selling  of  shoes  and  will 
be  termed  Administrative  Expense. 

The  second  division  will  include  expenses  which  are 
necessary  to  either  the  producing  or  selling  of  shoes  and 
will  be  further  subdivided  into  Operative  and  Distributive 
Expense. 

Operative  expense  will  include  royalty  and  depreciation 
on  machinery  and  equipment. 

Distributive  expense  will  include  all  costs  of  selling 
and  of  collecting  accounts. 

An  organization  which  operates  more  than  one  factory 


18     COMPREHENSIVE  ACCOUNTING  METHODS 

and  has  branches  should  have  three  or  more  main  divisions 
of  expenses,  but  the  writer  is  considering  in  this  instance  a 
business  having  one  factory  only.  To  make  the  subject  as 
clear  as  possible,  all  complications  that  can  be,  have  been 
avoided,  and  accordingly  no  details  regarding  sole  cutting, 
heel  building  or  the  carrying  of  stock  shoes  are  considered, 
no  provision  being  made  for  the  cost  of  operating  such  items. 

If  a  stock  shoe  department  is  run  in  connection  with  a 
manufacturing  business,  it  should  be  treated  as  a  separate 
business,  being  charged  with  rent  for  the  space  it  occupies  to 
carry  on  its  affairs  and  also  with  the  capital  used  in  its 
operation,  as  well  as  insurance,  taxes,  interest,  etc.  It 
should  not  be  charged  with  shoes  at  cost  plus  a  profit,  but 
the  factory  should  be  credited  and  the  stock  shoe  depart- 
ment charged  with  goods  at  total  manufacturing  cost,  as 
shown  in  Chapter  5,  on  Form  No.  1. 

The  illustrations  of  costs  and  estimates  as  shown  in  the 
following  chapters  are  purely  imaginary,  and  are  not  copied 
from  any  particular  business,  but  they  will  be  found  upon 
test  to  be  true  comparisons.  A  vast  amount  of  careful  work 
has  been  expended  in  making  them. 


CHAPTER  3 
CLASSIFICATION  OF  ACCOUNTS 

THE  main  books  required  are  a  private  ledger  and  one 
or  more  sales  ledgers.     A  purchase  ledger  may  or 
may  not  be  used,  according  to  the  wishes  of   the 
individual  accountant  or  manufacturer,  but  a  distribution 
system  where  all  purchases  and  expenses  are  finely  divided  / 
is  indispensable.     No  forms  will  be  shown  for  the  above,  or 
for  sales  books  and  invoice  registers,  as  there  are  many  kinds 
which  are  equally  good.     Forms  will  be  shown  for  stores 
and  cost  keeping. 

At  this  stage  we  are  only  interested  to  get  at  the  founda- 
tion. Many  manufacturers  have  no  systematic  method  of 
checking  an  invoice.  One  person  will  "O.K."  it  at  the  left- 
hand  top  corner,  another  at  the  bottom,  etc.  The  best 
method  is  to  have  a  rubber  stamp  similar  to  the  one  shown 
in  Chapter  6.  The  auditor  must  not  pass  the  invoice  for 
payment  unless  all  spaces  on  the  invoice  have  been  properly 
filled  in.  The  auditor's  approval  should  show  on  the  check 
and  not  on  the  invoice. 

This  classification  and  arrangement  of  accounts  is  in 
keeping  with  the  explanations  and  argument  in  Chapter  2. 

By  reference  to  the  Estimate  Sheet,  Form  No.  1,  Chapter 
5,  the  reader  will  observe  that  the  accounts  classified  here- 
with are  in  accordance  with  the  line-up  of  this  estimate  sheet. 

The  object  is  to  be  able  to  prove  any  division  of  these 

19 


20    COMPREHENSIVE  ACCOUNTING  METHODS 

estimate  sheets  in  total  at  the  end  of  a  season,  and  to  have  all 
cost  accounting  based  upon  this  sheet,  for  it  is  the  foundation 
of  the  whole  cost  system,  as  it  should  be  in  any  shoe  manu- 
facturing business,  being  the  basis  upon  which  all  contracts 
are  made. 

MERCHANDISE  DIVISION 


UPPER  DEPARTMENT 

All  Upper  Leather 

Cambric 

Canvas 

Cloth  for  Tops 

Drills 

Duck  (Except  Gem) 

Flannels 

Gore 

Stays 

Sheep  Skins 

Tongues 

Top  Facings 

Etc. 


SOLE  DEPARTMENT 

Box  Toes 
Counters 
Cushion  Felt 
Flexible  Leather 
Gem  Duck 
Heels 

Inner  Soles 
Outer  Soles 
Rubber  Heels 
Sole  Leather 
Taps 
Top  Lifts 
Etc. 


REGULAR  FINDINGS 

Blackings 

Bobbins  (Wound) 

Cements 

Chalks 

Cheesecloth 

Chemicals 

Cleaners  (Except  "Excess") 

Crayons  (Marking) 

Dressings 

Filling  (Bottom) 

Flour 

Inks  (Except  for  Office) 

Nails  (Shoe) 

Oil  (Not  Machinery) 

Paper  (Except  Tissue  and  Covers) 

Paste 

Polishes 

Sandpaper 

Scouring  Paper 

Shellac 

Silk 

Silkolene 

Sponges 

Stains 

Stickers 

Tacks 

Thread 

Twine 

Wax 

Wire  (Except  Button  Wire) 


COMPREHENSIVE  ACCOUNTING  METHODS      21 


SUPPLIES 

Buttons 

Cartons 

Cases 

Eyelets 

Heel  Pads 

Hooks 

Labels  (Inside) 

Laces 

Nails  (Shipping) 

Pull  Straps 

Ribbons 

Seam  Welting 

Shanks 

Sock  Linings 

Stays 

Tissue  Paper 

Etc. 


EXECUTIVE 


EXCESS  FINDINGS 

All  material  used  on  button  shoes 
in  stitching  room,  such  as: 

Thread 

Silk 

Twist 

Wire 


Patent  Leather  Repairer 
Tan  Leather  Repairer 
Waterproofing 
Etc. 


LABOR  DIVISIONS 
NON-PRODUCTIVE 

SUPEBINTENDENCE 


General  Manager 

Assistant  General  Manager 

Sales  Manager 

Treasurer  and  Credit  Manager 

Auditor 

Production,  Cost  and  Office 

Manager 
Purchasing  Agent 
Paymaster 
Advertising  Manager 

OFFICE 
All  Office  Help 


Superintendent 
Quality  Manager 
Department  Foremen 
Shipper 
Storekeeper 


SUNDRY 


Mechanics 

Engineer 

Firemen 

Elevator 

Etc. 


PRODUCTIVE 

Cutting  Department,  Day 

Stitching 

Stock  Fitting     " 

Lasting 

Bottoming 

Finishing 

Packing  and  Shipping  Department  " 


Piece 
« 


22     COMPREHENSIVE  ACCOUNTING  METHODS 

EXPENSES  —  ADMINISTRATIVE 

Club  and  Association  Dues 

Traveling  in  connection  with  above 

Charities 

Audit  and  Legal  aside  from  Collection  Expense 

Sundries 

EXPENSES  —  OPERATIVE 

Rent  Water,  Light  and  Telephone 

Taxes  Machinery  Repairs 

Insurance  Factory  Equipment  Repairs 

Interest  Extra  Cost  of  Samples 

Power  and  Heat  Office  Supplies 

Freight,  Express,  etc.  Sundries 
Shoe  Loss  Allowance 

EXPENSES  —  DISTRIBUTIVE 

Advertising  Mercantile  Agencies,  etc. 

Bad  Debts  Salesmen's  Salaries  or  Commis- 

Discount  sions 

Traveling  Expenses 

MACHINERY,   EQUIPMENT,  PARTS,  TOOLS,  ETC., 
WHICH  STORE  DEPARTMENT  WILL  DISTRIBUTE 

MACHINERY  FACTORY  EQUIPMENT 

All  Machines,  Freight  and  Benches 

Drayage,  and  the  labor  cost  Bins 

of  setting  them  up  Electrical  Supplies 

Belting  Furniture 

Hangers  Hangers  for  Shoes 

Pulleys  Partitions 

Shafting  Racks 

Lasting  Jacks  Scales 

Etc.  Etc. 

Labor  on  all  new  construction 


COMPREHENSIVE  ACCOUNTING  METHODS     23 

MACHINE  PARTS  AND  REPAIRS      LASTS  AND  SOLE  PATTERNS,  ETC. 

All  Machine  Parts 

Awls  Forms 

Belts  (Practically  all)  Lasts 

Belt  Hooks  Sole  Dies 

Belt  Fasteners  Sole  Patterns 

Belt  Lacings  Tree  Feet 

Belts  when  used  for  new  con- 
struction should  be  charged  UPPER  PATTERNS  AND  DIES 
to  Machinery  Account 

Replacements  to  Operating  Cost     Clicking  Dies 

Edge  Cutters  and  Irons  Hand  Dies 

Emery  Wheels  (Replacements)       Upper  Patterns 

Feed  Points 

Felt  Roll  (Replacements) 

Groovers 

Heel  Trimming  Cutters 

Heel  Breasting  Knives 

Naumkeag  Pads  (Replacements) 

Power  Brushes  (Replacements) 

Roll  Covers  (Replacements) 

TOOLS  AND  APPLIANCES 

NOTE:  Tools  should  be  divided  into  "Shoe  Tools"  (that  is, 
tools  which  are  used  actually  on  shoes)  and  "Sundry  Tools," 
(that  is,  tools  which  are  used  around  the  plant  but  are  not  used  on 
shoes) . 

Awls 

Brooms 

Carpenters'  Tools 

Hammers 

Hand  Brushes 

Hatchets 

Knives  (Not  Machine) 

Machinists'  Tools 

Mauls 

Oil  Cans 

Polishing  Cloth 

Saws 

Etc. 


24     COMPREHENSIVE  ACCOUNTING  METHODS 

POWER  AND  HEAT 
Fuel 

Cartage  and  Freight  on  Fuel 
Cotton  Waste 
Engine  Oil 
Machine  Oil 
Etc. 

PRINTING  AND  STATIONERY 
Books 
Covers 
Paper 
Printing 
Tags 
Etc. 

SANITARY  SUPPLIES 
Toilet  Paper 
All  Cleaning  Materials 
Etc. 


CHAPTER  4 
EXPLANATION  OF  ESTIMATES 

IN  arranging  the  following  estimates  and  accounts  it 
seemed  inadvisable  to  complicate  the  accounting  by 
having  the  shoe  company  own  the  land  and  building, 
therefore,  they  will  be  considered  as  owned  by  a  separate 
company.  The  manufacturing  concern  is  to  pay  rent  for 
use  of  the  building  equipped  ready  to  make  power  and  heat, 
with  a  sprinkler  system,  and  with  such  other  contrivances 
as  would  be  furnished  with  a  well-equipped  building  ready 
to  install  shafting  and  machinery.  All  pulleys,  belts, 
hangers,  shafting  and  machinery  will  belong  to  the  operating 
company,  with  the  exception  of  those  which  pertain  to  the 
main  power  drive. 

There  are  several  reasons  for  doing  this,  the  chief  one 
being  that  it  is  the  easiest  way  to  show  the  capital  invested 
in  the  manufacture  of  shoes,  which  capital  should  earn  a  far 
greater  per  cent  than  capital  invested  in  the  land  and  build- 
ing. The  owners  of  the  capital  invested  in  the  real  estate 
may  well  be  content  with  a  small  profit  over  and  above  the 
fixed  charges  for  upkeep,  taxes,  insurance,  etc.  On  the 
capital  invested  in  the  shoe  manufacturing  industry,  we  hope 
to  realize  earnings  of  not  less  than  20%  net.  The  real 
estate  and  building  investment  ought  not  to  and  cannot  earn 
any  such  a  rate.  Therefore,  we  start  on  a  basis  of  paying 
rent.  By  making  figures  on  this  basis,  it  will  be  much 

25 


26    COMPREHENSIVE  ACCOUNTING  METHODS 

easier  for  any  accountant  or  manufacturer,  who  is  interested, 
to  study  the  figures  and  apply  any  or  all  parts  of  them  to 
some  specific  business  than  it  otherwise  would  be. 

Instances  have  come  to  the  writer's  notice  where  an  or- 
ganization owning  a  number  of  factories  put  such  a  heavy 
burden  upon  the  superintendents  in  charge  that  they  were 
unable  to  make  shoes  good  enough  to  meet  the  requirements 
of  the  trade  at  the  prices  allowed  them.  In  one  instance  a 
concern  erected  a  new  factory  and  insisted  that  it  should  be 
all  paid  for  in  two  years  by  adding  it  to  the  figured  cost  of 
the  shoes.  They  should  have  foreseen  the  results  which 
were:  short  sales,  poor  quality,  much  loss  by  inferior  and 
returned  shoes  and  a  further  loss  of  customers  who  were 
dissatisfied,  all  owing  to  the  mistaken  policy  of  trying  to 
depreciate  the  building  in  a  couple  of  years.  They  should 
have  been  satisfied  to  have  done  it  in  ten  years. 

After  the  plant  has  been  paid  for,  some  manufacturers  go 
to  the  other  extreme  and  reduce  the  burden  to  be  figured 
upon  the  product,  because  there  is  no  investment  in  real 
estate  and  buildings,  and  in  many  cases  machinery.  Shoes 
are  then  figured  too  low  and  the  jobber  or  retailer  is  given  an 
advantage  which  he  is  not  entitled  to. 

The  sensible  and  winning  policy  is  to  charge  the  product 
with  what  it  ought  to  bear  under  an  efficient  management. 
If  investments  are  depreciated  too  fast,  shoes  will  be  figured 
too  high.  If  depreciated  too  slowly,  shoes  will  be  figured 
too  low. 

The  figures  used  in  the  next  chapter  are  based  upon  a 
brick  building  which  should  be  good  for  twenty  years  and 
has  been  depreciated  on  that  basis.  The  fund  created  by 
the  depreciation  may  be  invested  in  any  way  which  suits  the 
building  management,  a  good  way  being  to  loan  it  to  the 
operating  company  at  4  or  5%.  They  do  not  want  to  pay 


COMPREHENSIVE  ACCOUNTING  METHODS     27 

it  out  in  dividends  because  later  on  they  may  desire  to 
build  another  factory. 

In  making  shoes  of  various  constructions  and  kinds,  and 
selling  them  to  both  jobbers  and  retailers,  and  possibly  also 
to  their  own  stores,  complications  will  arise  which  necessitate 
that  more  detail  be  added. 

It  is  the  intention  in  this  case  to  show  the  results  of  a 
fairly  large  business  operating  a  single  factory,  in  order  to 
leave  out  the  complications  which  would  confuse.  The 
business  in  question  is  treated  as  though  it  had  been  running 
for  some  time  before  the  following  method  was  introduced. 

The  output  of  this  factory  should  be  400,000  pairs  of 
shoes  every  six  months,  at  an  average  price  of  $2.50  per  pair, 
a  money  value  of  $1,000,000. 

It  is  possible  to  make  425,000  pairs,  but  it  is  wiser  not  to 
estimate  the  maximum  capacity.  Therefore,  estimates  will 
be  made  on  the  smaller  figure. 

The  figures  used  as  an  illustration  herewith  are  not  copied 
from  any  concern,  but  are  similar  to  those  found  in  a  great 
number  of  factories.  The  product  is  to  be  distributed  en- 
tirely to  the  retail  trade  in  the  usual  way  by  salesmen  and 
advertising.  It  will  require  a  capital  and  loaning  capacity 
of  from  $600,000  to  $850,000,  depending  entirely  upon  the 
number  of  repeating  orders  which  will  determine  the  number 
of  times  the  capital  is  turned  over.  We  will,  therefore, 
start  on  the  basis  that  the  capital  stock  of  the  company  is 
$600,000.  We  are  going  to  strive  for  6%  net  profit  upon 
the  sales,  which  will  be  equivalent  to  $60,000  for  six  months 
operation,  or  20%  per  year  upon  the  capital. 

Having  arranged  these  estimates  as  above,  we  are  ready 
to  proceed  with  a  plan  for  an  accounting  system.  It  is  not 
necessary  to  go  into  all  the  details  or  show  every  printed 
form  needed  to  carry  on  the  business,  but  enough  will  be 


28     COMPREHENSIVE  ACCOUNTING  METHODS 

shown  to  give  ample  illustrations  and  bring  out  all  vital 
points. 

It  must  be  borne  in  mind  that  a  shoe  manufacturer  is  a 
contractor.  He  constructs  a  line  of  samples,  sends  salesmen 
out  on  the  road  to  sell  his  product  months  in  advance  of 
delivery  dates,  and  his  samples  and  order  books  specify  the 
terms  of  his  contracts  under  which  he  agrees  to  deliver  cer- 
tain goods  at  certain  prices.  His  estimate  figures  must  all 
be  made,  if  he  is  to  know  what  he  is  doing,  long  before  the 
salesmen  leave,  and  the  accounting  must  demonstrate  the 
accuracy  of  those  estimates. 

The  arrangement  of  accounting  here  shown  is  designed  to 
furnish  this  proof  in  three  ways.  Therefore,  it  can  be  adopted 
by  the  man  who  likes  to  see  much  detail  in  order  to  satisfy 
himself,  it  can  be  adopted  by  the  man  who  cares  only  to 
know  that  he  is  headed  in  the  right  direction,  and  that  all  his 
estimates  are  being  verified,  or  it  can  be  adopted  by  the  man 
who  desires  a  reasonable  proof  that  every  branch  is  operating 
within  a  certain  per  cent  of  his  estimates. 

The  first  method  is  illustrated  in  Chapter  7,  by  "Detailed 
Reports."  In  these  reports  the  reader  will  find  that  every 
cost  of  the  business  is  reduced  to  a  positive  proof.  The 
minutest  costs  are  considered  and  the  condensed  reports  are 
compiled  therefrom. 

At  each  balancing  period,  all  items  of  cost  of  operation 
are  charged  to  "  Goods  in  Process,"  and  the  shoes  finished  are 
charged  to  "Finished  Shoes."  The  difference  between  esti- 
mates and  cost  are  debited  or  credited  to  Operating  Gain 
and  Loss  or  Distributive  Gain  or  Loss. 

The  second  method  needs  no  illustration,  because  it  is 
the  same  as  the  first,  except  that  nothing  is  completed  in 
the  form  of  reports.  The  result  is  actually  as  if  a  book- 
keeper kept  an  accounts  receivable  ledger  without  taking  a 


COMPREHENSIVE  ACCOUNTING  METHODS     29 

trial  balance.  The  cutting  test  slips  would  show  gains  and 
losses  day  by  day,  but  no  complete  tabulations  would  be 
kept  to  show  the  period  results.  Other  estimates  would  be 
kept  in  like  manner.  Some  clerical  cost  would  be  saved 
over  the  first  method,  but  the  manufacturer  so  operating 
never  knows  of  a  great  loss  until  it  may  be  too  late. 

The  third  method  goes  beyond  the  second,  but  not  as 
far  as  the  first,  and  can  be  operated  under  any  conditions 
provided  the  plan  is  properly  arranged.  A  table  of  per- 
centages can  be  constructed  to  guide  each  department. 
More  on  this  subject  will  be  found  in  Chapter  8. 

There  are  two  methods  of  estimating  shoe  costs.  They 
can  both  be  developed  from  Exhibit  No.  1.  On  Form  No.  1 
is  an  illustration  of  a  method  of  listing  all  material,  labor 
costs  and  fixed  charges  after  standards  have  been  properly 
arranged. 

The  other  method  (See  Exhibit  No.  2)  is  a  sort  of  "Pro- 
cess of  Elimination,"  and  is  the  better  method  for  making 
quick  estimates,  and  is  a  means  by  which  salesmen  can  be 
taught  how  to  estimate  shoe  costs  at  a  minute's  notice, 
but  does  not  give  enough  detail  regarding  cost  of  material 
or  labor. 

More  than  $1.31i  cannot  be  allowed  for  the  merchandise 
part  of  the  shoe.  Here  is  the  opportunity  always  open  to 
the  manufacturer  to  display  his  ability  or  cunning,  as  policy 
and  his  make-up  direct;  and  they  would  be  reflected  per- 
fectly if  many  sets  of  figures  could  be  compiled  as  Exhibit 
No.  8,  Chapter  8.  One  manufacturer  making  a  $2.50  shoe 
may  put  in  only  47%  material  and  25%  labor,  whereas 
another  will  put  in  54%  material  and  only  18%  labor. 
The  labor  market  is  partly  responsible  for  this  condition, 
but  lack  of  science  is  a  large  cause. 

As  stated  previously,  estimates  are  to  be  based  upon  a 


30     COMPREHENSIVE  ACCOUNTING  METHODS 


business  of  400,000  pairs,  selling  at  an  average  price  of  $2.50 
per  pair.  The  figures  below  are  to  illustrate  the  first  gross 
estimate  to  be  made  and  also  the  prime  figures  for  the  third 
method  mentioned.  (See  Chapter  8  for  complete  figures.) 

EXHIBIT  No.  1 

GROSS  COST  ESTIMATES  FOR  SEASON 


AVERAGE  COST  PER  CENT 
COST 

52.50 


ITEMS                         PER  100  PAIR 

All  Material  Less  Discount  $131.25 

"   T  oK™  <  Non-Productive  5 . 68  ) 

M  Productive  49.32) 

"   Royalties  5.75 

"   Depreciation  5.00 

"   Operative  Expenses  10.00 


22-°° 
2.30 
2.00 
4.00 


MONEY 
VALUE 

$525,000.00 
220,000.00 

23,000.00 
20,000.00 
40,000.00 


Ready  to  Sell 

All  Distributive  Expenses 
'   Selling  Discount 

Distributive  Cost 

All  Costs 
Sales  Value 

Gross  Profit 
Administrative  Expenses 

Net  Profit 


$207.00  82.80  $828,000.00 

$22.50  9.00  $90,000.00 

5.00  2.00  20,000.00 

$27.50  11.00  $110,000.00 


$234.50 
250.00 

$15.50 
.50 

$15.00 


93.80 
100.00 

6.20 
.20 


$938,000.00 
1,000,000.00 

$62,000.00 
2,000.00 


6.00          $60,000.00 


Exhibit  No.  2  is  an  illustration  showing  that  only  $1.31} 
can  be  put  into  the  material.  See  Estimate  Sheet,  Form 
No.  1,  for  a  demonstration  of  the  details  of  this,  but  note 
that  the  amount  is  $1.3375  and  the  estimated  net  profit  is 
5%  instead  of  6%. 

It  is  proposed  by  efficient  methods  to  effect  savings 
which  will  bring  the  profits  up  to  6%,  which  will  produce 
20%  profit  on  capital  invested. 


COMPREHENSIVE  ACCOUNTING  METHODS      31 

In  order  to  simplify  figuring  and  have  close  allowances, 
all  shoes  should  be  estimated  in  one  hundred  pair  lots.  By 
so  doing,  fractions  of  a  cent  may  be  dropped  without  any 
variation  worth  consideration  and  odd  numbers  of  pairs 
can  be  priced  very  quickly. 

EXHIBIT  No.  2 
"PBOCESS  OF  ELIMINATION" 

1st.  The  Selling  Price  of  a  shoe  is $2.50 

2nd.  Profit  @  6.00%=  .150 

3rd.  Administrative  Expense  .20%=  .005 

4th.  Selling  "  "  11.00%  =  .275 

5th.  Operative  "  4.00%  =  .100 

6th.  Depreciation  "  2.00%  =  .050 

7th.  Royalty  "  2.30%  =  .0575 

8th.  Non-Productive  Labor  2.27%  =  .0568 

Total  Fixed  Charges  .  6943 

Balance  left  for  Productive 

Labor  and  Materials  $1 . 8057 

9th.    All  Productive  Labor  Costs  .4932 


10th.  Balance  left  to  use  in  detailed  materials  $1.3125 


In  Operative  Expense  will  be  found  every  expense  item 
that  is  incurred  in  the  process  of  making  shoes. 

In  Distributive  Expense  is  kept  every  item  of  expense 
necessary  in  selling  goods  and  collecting  the  accounts. 

Any  expense  not  included  in  the  two  classes  above  will, 
therefore,  be  for  something  other  than  the  making  or  selling 
of  shoes. 

Administrative  Expense  will  include  Legal  and  Audit, 
Association  Dues,  some  Traveling,  Charities,  etc. 

In  a  large  concern  with  more  than  one  factory,  having 
jobbing  houses,  etc.,  it  is  necessary  to  keep  a  large  amount 
of  expenditure  under  the  above  heading,  but  not  in  the 


32     COMPREHENSIVE  ACCOUNTING  METHODS 

business  herein  described,  therefore  no  detailed  estimates 
are  shown.  However,  by  referring  to  Exhibits  Nos.  1  and 
8,  the  reader  will  see  that  an  allowance  of  $2,000  was  made 
for  the  total  of  this  expense;  by  referring  to  Form  No.  1, 
that  50  cents  per  one  hundred  pairs  was  allowed  in  the 
Estimate  Sheet. 

Dividends  will  not  be  considered  as  an  expense,  but  must 
come  out  of  profits. 

It  is  generally  agreed  by  the  best  accountants  that 
expense  burden  should  be  applied  to  any  given  shoe  pro  rata 
to  the  Productive  Labor  cost.  The  theory  is  that  under 
normal  labor  conditions,  the  shoe  which  is  the  slowest  and 
hardest  to  make  will  incur  the  highest  labor  cost,  but  in 
many  places  where  labor  unions  are  strong,  this  condition  is 
not  found  but  quite  often  the  reverse. 

There  are  several  other  methods  in  use,  but  in  this  case 
we  will  assume  that  the  product  is  so  nearly  uniform  that  a 
fixed  price  can  be  used.  Estimates  of  operation  expense 
will  therefore  be  made  at  an  average  price  of  10  cents  per 
pair.  Such  expenses  as  Taxes,  Insurance  and  Interest 
should  be  pro-rated  each  period  and  no  actual  loss  or  gain 
can  be  shown  on  Taxes  until  tax  bills  are  received. 

Special  schedules  of  Productive  Labor  should  be  ar- 
ranged from  which  the  labor  cost  of  shoes  may  be  estimated 
rapidly.  There  are  many  ways  of  doing  this  after  a  general 
price  list  for  all  work  has  been  made. 

The  simplest  method  is  to  standardize  all  operations  in 
each  department  that  will  apply  to  certain  shoes,  and  by 
using  a  series  of  numbers,  group  them  so  that  the  cost  clerk 
looks  at  a  sample  or  style  and  jots  down  the  correct  group 
numbers  that  the  shoe  falls  into.  Then  the  figures  are 
assembled  by  these  combinations  until  the  whole  labor  cost 
is  entered  on  the  estimate  sheet. 


COMPREHENSIVE  ACCOUNTING  METHODS     33 

At  the  conference  on  Scientific  Management,  held  at 
Dartmouth  College,  October,  1911,  one  of  the  speakers 
said  that  a  business  scientifically  managed  would  divide  a 
year  into  thirteen  periods  of  four  weeks  each.  The  writer 
fifteen  years  ago  began  to  advocate  this  method,  because 
it  made  possible  accurate  cost  figure  comparisons,  whereas, 
a  business  conducted  on  a  monthly  basis  cannot  have 
accurate  comparisons  except  at  considerable  expense  when 
labor  is  paid  weekly  and  other  costs  are  considered  monthly. 

There  are  two  serious  disadvantages  in  the  adoption  of 
the  four- week  method.  First,  all  previous  monthly  statis- 
tics become  useless  and  much  expense  is  incurred  if  any 
comparisons  are  to  be  kept.  Second,  much  additional  work 
is  necessary  in  order  to  close  the  books  at  irregular  intervals 
when  all  statements  of  debtors  and  creditors  are  sent  and 
received  monthly.  To  overcome  these  objections,  the  writer 
conceived  the  plan  of  dividing  the  year  into  twelve  periods 
as  follows: 

Eight  periods  of  four  weeks  each  and  four  periods  of  five 
weeks  each.  By  so  doing,  each  period  can  be  made  to 
terminate  so  near  the  end  of  the  month  that  the  widest 
variation  at  any  one  time  will  be  three  days;  therefore,  all 
the  objections  to  the  four-week  method  are  removed  and  the 
advantages  of  accurate  comparisons  secured.  Notice  the 
season  layout  in  the  next  chapter  and  observe  how  easy  it 
is  to  construct  reports  beginning  with  one-half  of  a  day  as 
a  unit  and  building  up  one  week  and  then  four  or  five  weeks 
for  a  Period. 

In  the  next  chapter  actual  allowances  are  shown. 

This  chapter  will  close  with  a  copy  of  the  opening  trial 
balance,  called  "Exhibit  No.  3,"  showing  the  titles  of  accounts 
which  are  to  be  kept  in  the  private  ledger.  Some  of  the 
accounts  at  opening,  do  not  have  any  balances.  The  trial 


34     COMPREHENSIVE  ACCOUNTING  METHODS 

balance  represents  the  starting  of  a  new  run  of  business  as  at 
inventory  period. 

In  arranging  the  accounts,  it  will  be  noted  that  they 
follow  the  English  method  of  accounting,  which  always  con- 
siders liabilities  first.  There  are  four  main  divisions  to  be 
considered  as  follows: 

100  Liability  Accounts. 

200  Asset  Accounts. 

300  Expense  Accounts. 

400  Adjustment  Accounts. 

The  cipher  affix  is  used  to  key  up  the  accounts. 


COMPREHENSIVE  ACCOUNTING  METHODS     35 

EXHIBIT  No.  3 

SMALL,  NICHOLS  &  Co.,  INC.,  SHOE  MANUFACTURERS 
Trial  Balance  at  Start,  September  30,  1912 


NO.                 ACCOUNT  NAMES 

DEBITS 

CREDITS 

101     Capital  Stock 

$600,000.00 

102     Surplus 

63,309.85 

103     Reserve  for  Machinery,  Equip-  ) 

ment,  Lasts,  Patterns  and  Dies  > 

77,200.00 

Depreciation                                 } 

104    Reserve  for  Shrinkage  of  Accounts 

Receivable 

2,778.61 

105     Notes  Payable 

100,000.00 

106    Accounts  Payable 

18,762.30 

107    Discount  Anticipated  on  Accounts 

Receivable 

11,322.12 

108    Discount  Deducted  from  Raw  Me  r- 

chandise 

4,679.67 

201     Cash  in  Banks 

$47,432.90 

202     Cash  in  Office 

500.00 

203    Accounts  Receivable  Ledgers 

566,105.75 

204     Personal  Accounts 

11,384.90 

205    Notes  Receivable 

2,000.00 

206    Stores  Department  Upper  Ledger 

56,780.30 

207         "                 "          Bottom       " 

34,440.90 

208         "                 "          Sundries     " 

25,770.50 

209     Goods  in  Process  (All  shipped) 
210    Finished  Shoes 

211     Returned  and  Damaged  Shoes 

3,664.05 

212     Machinery 

74,000.00 

213    Equipment  and  Fixtures 

20,000.00 

214    Lasts,  Sole  Patterns  and  Dies 

20,000.00 

215     Upper  Patterns  and  Dies 

10,000.00 

216    Labor  Productive  Prepaid 

1,262.80 

217                Non-Productive  Prepaid 

218    Insurance  Prepaid 

222.25 

S219     Interest 

2,762.60 

220    Taxes 

622.80 

221     Discount  Anticipated  on  Accounts 

Payable 

1,102.80 

301     Operative  Expenses 

302    Administrative  Expenses 

303    Distributive  Expenses 

401     Operative  Gain  and  Loss 

402    Distributive  Gain  and  Loss 

403    Figured  Profit 

404     Final  Gain  and  Loss 

$878,052.55 

$878,052.55 

CHAPTER  5 
DETAILED  ESTIMATES 

Total  Pairs  Average  Price  Money  Value 

400,000  $2.50  $1,000,000 

IF  we  operate  for  a  season  of  twenty-six  weeks,  or  one  hun- 
dred and  eighty-two  days  with  three  holidays  and 
twenty-six  Sundays  out,  we  will  have  one  hundred  and 
fifty-three  working  days  left.    Twenty-six  of  these,  however, 
will  be  Saturdays,  or  half  days.     Therefore,  we  will  have  in 
the  six  months,  one  hundred  and  twenty-seven  full  days  and 
twenty-six  half  days.     Reducing  it  all  to  a  half-day  basis,  on 
which  our  sheets  will  be  entered,  we  find  two  hundred  and 
eighty  half  days. 

To  produce  400,000  pairs  of  shoes,  it  will  be  necessary 
to  put  in  an  average  of  1,428^  pairs  of  shoes  every  half  day. 
Operating  schedule  will  be  as  follows: 

OPERATIONS  BEGIN  END  TIME         PERIOD  NO. 


Monday,  Sept.  30,  '12  Saturday,  Nov.    2 

5  Weeks 

1 

" 

Nov.    3    ' 

30 

4      " 

2 

" 

Dec.    1    " 

Dec.  28 

4      " 

3 

" 

"      30    " 

Feb.     1 

5      " 

4 

tt 

Feb.    3,  '13 

Mar.    1 

4       " 

5 

tt 

Mar.    3    " 

"    29 

4       " 

6 

Total 26      " 

37 


38     COMPREHENSIVE  ACCOUNTING  METHODS 

The  closing  date  would,  therefore,  be  March  29,  1913, 
profit  basis  to  be  5%  net  on  sales,  or  12 \  cents  per  pair,  making 
a  total  of  $50,000  for  the  six  months'  operations.  The 
other  1%  is  to  be  saved  on  allowances. 

The  next  step  will  be  to  make  estimates  for  operating 
the  factory  and  selling  the  product.  As  stated  in  Chapter  4, 
the  factory  will  be  rented,  but  below  is  given  the  basis  on 
which  the  rent  charge  is  to  be  arrived  at. 

The  investment  in  land  is  $10,000;  in  building,  power 
and  heating  plant,  sprinkler  system,  etc.,  $60,000.  Rent 
to  be  $9,000  based  as  follows: 

Five  per  cent  dividend  on  the  investment  of  $70,000, 
$3,500;  taxes  and  insurance,  $1,500;  reserve  for  deprecia- 
tion of  plant,  5%  of  the  total  investment,  $3,500  a  year; 
repairs,  alterations,  etc.,  $500. 


COMPREHENSIVE  ACCOUNTING  METHODS      39 


EXHIBIT  No.  4 

MANUFACTURING  OR  OPERATIVE  EXPENSE  ESTIMATES 
Based  on  4%  of  Sales  =  $40,000 

Divided  as  follows: 


26  WEEKS 

4  WEEKS 

5  WEEKS 

Rent 

$4,500.00 

$692.31 

$865.39 

Taxes 

2,000.00 

307.69 

384.61 

Insurance 

1,500.00 

230.77 

288.46 

Interest 

4,000.00 

615.38 

769.23 

Power  and  Heat 

2,000.00 

307.69 

384.61 

Freight  and  Express 

6,000.00 

923.08 

1,153.85 

Water,  Light  and  Telephone 

1,000.00 

153.84 

192.31 

Machinery  Repairs 

4,000.00 

615.38 

769.23 

Factory  Equipment  Repairs 

1,000.00 

153.84 

192.31 

Extra  Cost  of  Samples 

2,000.00 

307.69 

384.61 

Office  Supplies 

3,000.00 

461.54 

576.92 

Sundries 

2,000.00 

307.69 

384.61 

Shoe  Loss  Allowance 

7,000.00 

1,076.92 

1,346.15 

Totals 

$40,000.00 

$6,153.82 

$7,692.29 

Output  of  Shoes  in  pairs  must  be 

400,000 

61,536 

76,920 

Allowance  will  be  10  cents  per  pair. 


If  we  get  above  output  at  above  costs,  no  gain  or  loss 
will  occur.    For  figures  of  costs,  see  Report  No.  8,  Chapter  7. 


40    COMPREHENSIVE  ACCOUNTING  METHODS 


EXHIBIT  No.  5 
NON-PRODUCTIVE  LABOR  ESTIMATE 

OPERATIVE  DISTRIBUTIVE 


26 

4 

5 

26 

4 

5 

WEEKS 

WEEKS 

WEEKS 

WEEKS 

WEEKS 

WEEKS 

Executive 

$7,540 

$1,160 

$1,450 

$5,850 

$900 

$1,125 

Superintendence 

9,178 

1,412 

1,765 

Office 

3,900 

600 

750 

1,300 

200 

250 

Sundries 

2,106 

324 

405 

Totals 

$22,724 

$3,496 

$4,370 

$7,150 

$1,100 

$1,375 

Operative  Cost  should  therefore  average  $5.68  per 
100  pairs. 

Selling  or  Distributive  Cost  should  average  $1.79  per 
100  pairs. 


COMPREHENSIVE  ACCOUNTING  METHODS     41 


EXHIBIT  No.  6 

DISTRIBUTIVE  EXPENSES 
Total  Estimate  9%  =  $90,000  as  follows: 


% 

26  WEEKS 

4  WEEKS 

5  WEEKS 

Selling  Labor 

.715 

$7,150 

$1,100.00 

$1,375.00 

Advertising 

2.000 

20,000 

3,076.92 

3,846.15 

Mercantile  Agencies,  etc. 

.100 

1,000 

153.84 

192.31 

Sundries 

.185 

1,850 

284.61 

355.77 

Totals 

3.000 

$30,000 

$4,615.37 

$5,769.23 

Bad  Debt  Loss 

.500 

$5,000 

Salesmen's  Costs 

5.500 

55,000 

Totals 

$90,000 

Discount 

2.000 

$20,000 

In  applying  these  figures  to  shoes  where  they  vary  from 
$2.50,  the  average  price,  it  will  be  necessary  to  use  a  fixed 
charge  of  7|  cents  per  pair,  plus  6%  for  salesmen's  cost 
and  bad  debt  losses,  as  salesmen  are  on  a  commission  basis 
°f  5?%  and  losses  by  bad  debts  are  also  based  on  a  per  cent. 

The  reader  is  again  referred  to  Form  No.  1  for  specifi- 
cations of  a  detailed  shoe,  which  shows  the  application  of 
these  figures. 


42      COMPREHENSIVE  ACCOUNTING  METHODS 


FORM  No.  1 

ESTIMATE  SHEET 

Sample  No.  221  Date:  Spring  Season,  1912-13 

Kind:  Men's  Box  Calf  Blucher  Bal. 


ITEMS 

NO. 

DESCRIPTION 

COST 

TOTAL 

Whole  Shoe 

1 

$60.00 

Vamp  and  Fox 

2 

Quarter 

3 

Collar 

4 

Strap 

5 

Tip 

6 

Back  Stay 

7 

Leather  Inside  Stay 

8 

2.00 

"       Quarter  Lining 

9 

"       Strap 

10 

"       Sock 

11 

Tongue 

12 

2.00 

Top  Facing 

13 

1.15 

Drill  Lining 

14 

2.50 

Vamp  Doubler 

15 

.75 

Cloth  Stays 

16 

Toe  Plug 

17 

.12 

18 

Cripple  Allowance 

19 

.25 

Total  Upper  Cost 

20 

$68.77 

Outer  Sole 

21 

25.00 

Inner  Sole 

22 

10.00 

Tap 

23 

Counter 

24 

5.00 

Box  Toe 

25 

2.25 

Welting 

26 

4.50 

Heel 

27 

5.00 

Toplift 

28 

4.00 

29 

Cripple  Allowance 

30 

.10 

Total  Bottom  Cost 

31 

55.85 

Buttons 

32 

Cartons,  Case  and  Tissue 

33 

3.50 

Eyelets  and  Hooks 

34 

2.00 

Heel  Pads 

35 

.25 

Labels  Inside 

36 

.50 

Lace  or  Ribbons 

37 

1.00 

Pull  Strap 

38 

.60 

Shanks 

39 

.25 

Stays 

40 

Total  Supplies  Cost 

41 

8.10 

COMPREHENSIVE  ACCOUNTING  METHODS     43 


ITEMS 

NO. 

DESCRIPTION 

COST 

TOTAL 

Regular  Findings 
Excess 

42 
43 

$6.60 

Total  Findings  Cost 

44 

$6.60 

Total  Material  Cost 

45 

139.32 

Purchase  Discount 

46 

5.57 

Net  Material  Cost 

47 

133.75 

DAY      PIECE 

Cutting                Labor 
Stitching 
Stock  Fitting 
Lasting 
Bottoming 
Finishing 
Packing 
General 

48 
49 
50 
51 
52 
53 
54 
55 

$  .25  $5.50 
9.46 
1.03       .20 
5.00 
21.51 
3.62 
.45     2.30 

5.75 
9.46 
1.23 
5.00 
21.51 
3.62 
2.75 
5.68 

Total  Labor  Cost 

56 

55.00 

Depreciation 
Shoe  Loss  Allowance 
Operative  Expense 
Royalty 

57 
58 
59 
60 

5.00 
1.75 
8.25 
5.75 

Total  Operating  Expense  Cost 

61 

20.75 

Total  Manufacturing  Cost 

62 

209.50 

Selling  Expense 
Discount 

63 
64 

22.50 
5.00 

Total  Selling  Expense  Cost 

65 

27.50 

Total  Administrative   Exp.  Cost 

66 

.50 

Total  Cost 

67 

237.50 

Setting  Price 

68 

250.00 

Profit 

69 

5% 

12.50 

Pairs  Produced 

70 

CHAPTER  6 

RECEIVING  AND  STORE  DEPARTMENT  COST 
ACCOUNTING 

THE  best  organized  factory   is  one   having   but   one 
Store  Department;  therefore,  we   follow   this   plan. 
The  storekeeper  will  have  charge  under  the  purchasing 
agent  who  is  general  custodian  of  all  raw  material,  etc. 

The  receiver's  assistant  shall  fill  out  a  slip,  showing  the 
number  of  packages,  cases,  bundles,  etc.,  which  are  received, 
using  a  separate  slip  for  each  different  lot. 

Each  invoice  as  received  in  the  office  shall  have  a  rubber 
stamp  impression  placed  thereon  as  shown  herewith. 


1. 

Lot  No  

2. 

Date  Invoice  Received  

3. 

Date  Goods  Received  

4. 

Price  and  Discount  O.K  

5. 

Extensions  O.K  

6. 

Quantity  O.K  

7. 

Quality  O.K  

8. 

Entered  Store  Ledger  

9. 

Charge  Account  of  

10. 

Entered  Period  No  

11. 

Entered  Invoice  Book  

12. 

Paid  by  No  

The  Store  Department  shall  fill  in  all  of  the  items  down 
to  and  including  No.  10.  The  invoice  is  then  ready  to  be 
sent  to  the  financial  accounting  department. 

45 


46    COMPREHENSIVE  ACCOUNTING  METHODS 

All  material  of  every  nature  which  is  issued  from  the 
Store  Department  shall  be  delivered  on  written  requisition. 
Three  or  more  Store  Department  ledgers  shall  be  kept 
by  this  department,  sub-divided  as  follows :  One  for  Upper 
Department,  one  for  Bottom  Department,  and  one  for 
Supplies,  Findings,  Machine  Parts,  Office  Supplies,  etc. 

The  writer  is  here  dealing  solely  with  accounting  methods, 
and  while  he  believes  that  all  stock  should  be  sorted  and 
graded  in  accordance  with  cutting  standards,  this  feature 
will  not  be  herewith  treated.  He  is  not  going  into  the  science 
of  cutting  leather,  the  handling  of  cutters  under  a  bonus 
system,  or  any  of  the  detail  of  scientific  management.  That 
would  make  a  book  of  itself.  Suffice  it  to  say  he  has  never 
heard  of  a  cutting  department,  regardless  of  size,  where  it  is 
not  possible  to  increase  profits  by  more  efficient  methods. 

We  will,  therefore,  proceed  to  take  up  the  accounting  for 
the  Upper  Department. 

After  a  purchase  of  leather  is  received  and  the  invoice 
has  been  checked  up  as  described  above,  it  shall  be  entered 
on  "Leather  and  Cutter's  Record,"  Form  No.  2.  This  form 
has  been  designed  so  that  it  can  be  used  as  a  stock  ledger 
and  a  cutter's  record.  The  purchases  shall  also  be  entered 
on  the  Stock  Tag,  Form  No.  3,  which  is  to  be  attached  to  the 
leather  and  kept  with  it  until  the  lot  is  entirely  cut. 

The  "Cutter's  Slip,"  Form  No.  4,  is  in  itself  a  requisition 
and  may  be  used  as  such. 

As  the  stock  is  given  to  cutters,  notations  shall  be  made 
on  the  tag,  Form  No.  3.  When  the  slip  has  been  returned 
approved  by  the  sorter  and  figured  for  costs,  the  results  shall 
be  entered  upon  Form  No.  2,  first,  as  a  ledger  record  for 
the  particular  stock  cut;  second,  on  another  sheet,  as  a 
record  with  the  individual  cutter. 

This  sheet,  Form  No.  2,  is  so  arranged  that  a  feetage 


COMPREHENSIVE  ACCOUNTING  METHODS    47 

gain  or  loss  is  shown,  and  also  a  money  gain  or  loss.     The 
reason  for  this  is  as  follows : 

The  estimate  sheet  may  show  an  allowance  of  thirty-six 
feet  of  leather  to  cut  a  dozen  pairs  of  shoes .  The  particular  size 
run  given  the  cutter,  under  the  graded  allowance  system  in 
use,  may  require  thirty-eight  feet .  If  the  cutter  uses  the  thirty- 
eight  feet,  there  will  be  an  actual  money  loss  equivalent  to  two 
feet  of  leather.  If,  however,  the  cutter  cuts  the  dozen  pairs  of 
shoes  out  of  thirty-seven  feet,  our  record  shows  that  thirty- 
eight  feet  were  allowed  and  that  the  cutter  gained  one  foot .  If 
twenty-five  cent  leather  were  used,  there  would  be  an  actual 
money  loss  of  twenty-five  cents .  The  cutter  is  not  in  any  way 
responsible  for  this  loss.  It  was  occasioned  simply  because 
the  sizes  and  widths  were  larger  than  the  average  upon 
which  the  cost  of  the  shoes  was  estimated. 

A  tabulation  of  all  cutters'  slips  shall  be  made,  using 
this  form  (No.  2),  showing  the  gain  or  loss  of  the  cutting 
room  for  each  day. 

This  shall  be  continued  each  day,  accumulating  totals 
until  the  end  of  a  period,  when  the  following  records  shall 
be  made: 

First,  the  period  results  of  each  individual  cutter. 

Second,  the  period  results  of  all  cutters  combined. 

Third,  a  balance  sheet  from  the  ledger,  showing  the 
total  amount  debited  and  credited,  the  balance  on  hand,  and 
the  profit  or  loss  on  each  kind  or  lot  of  leather.  Additional 
forms  will  be  necessary,  such  as  Form  No.  5  for  record  of 
the  cost  of  stock  used  for  cripple  shoes,  and  Form  No.  6  for 
the  record  of  cost  of  linings. 

There  are  two  simple  ways  of  handling  lining  records, 
either  of  which  is  satisfactory.  One  is  to  standardize  linings 
and  cut  them  by  weight,  the  other  is  to  charge  each  day 
all  lining  stock  given  to  the  lining  cutting  department  and 


48    COMPREHENSIVE  ACCOUNTING  METHODS 

credit  department  with  the  production,  charging  to  loss 
or  gain  the  difference. 

In  addition,  if  tongues,  stays,  facings,  etc.,  are  cut, 
instead  of  being  bought,  forms  must  be  provided  for  them, 
but  none  are  shown  herewith. 

Report  No.  1,  shown  in  Chapter  7,  gives  a  condensed 
result  of  the  operations  in  upper  material  for  the  fourth 
period  of  five  weeks,  ending  February  1,  1913. 

In  the  division  of  store  department,  under  Bottom  Cost, 
shall  be  kept  all  uncut  sole  leather,  outer  soles,  inner  soles, 
taps,  counters,  box  toes,  welting,  heels,  toplifts,  etc. 

Form  No.  7  shown  herewith  may  be  used  as  a  ledger, 
and  is  so  designed  that  it  will  cover  raw  stock  or  cut  stock. 
It  also  shows  sales  and  gains  or  losses  made  by  manufac- 
turing or  selling. 

Form  No.  8  may  be  used  for  sole  cutting  records. 

Another  form  must  be  provided  for  sorting  so  that 
quality,  irons  and  sizes  may  be  shown,  with  such  other  data 
as  is  required.  If  a  perpetual  inventory  of  cut  stock  is  kept, 
it  will  be  debited  directly  from  these  sorters'  slips. 

Form  No.  9  is  a  requisition  slip  for  all  of  the  material 
required  from  the  store  department  for  a  given  day's  work. 
This  sheet  is  filled  out  by  a  clerk  and  turned  over  to  the 
store  department  to  issue  to  the  factory.  In  all  cases 
where  the  particular  article  ordered  is  not  supplied,  in  the 
column  headed  "Substituted"  is  entered  the  number  of 
pairs  changed,  together  with  the  gain  or  loss  by  the  substitu- 
tion. It  is  the  only  gain  or  loss  which  this  sheet  can 
show. 

The  results  of  this  sheet  may  be  carried  each  day  to  a 
perpetual  inventory  record,  and  shall  be  carried  to  a  final 
report  for  the  period.  (See  Report  No.  2,  Chapter  7.) 

The  store  ledgers  for  supplies,  findings,  special  findings, 


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50     COMPREHENSIVE  ACCOUNTING  METHODS 


Form  No.  3 


Stock  Tag  No.  15A.       Small,  Nichols  &  Co..  Inc.         No.  2385-1-170. 

LOT  No.                   DATE 

FROM                        MARK 

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No.  L 


DAILY  LINING  REPORT 


(Form  No.  6) 


OUR 
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Total  Cost  Charge  to  Cost  of  Production 


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LEATHER  LININGS  OR  TO  PROVE  SHEET 

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-_^-^^-  —  . 

2122-94-186  Small,  Nichols  &  Co.,  Inc.,  Bost 

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SOLE  LEATHER  CUTTERS  SLIP              N9     6 

(Form  No.  8) 

CUTTER                                           NO.                                   DATE 

OUR                                  PURCHASED                      LOT                   COST 
MARK                              FROM                                      NO.                    PER 

TIME 
STARTED 

LDS. 
GIVEN 

LBS. 
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TIME 
FINISHED 

LBS. 
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(56) 


COMPREHENSIVE  ACCOUNTING  METHODS     57 

stationery,  machine  parts,  tools,  etc.,  shall  be  similar  to 
Form  No.  10. 

Form  No.  11  shall  be  supplied  to  each  department  in 
blocks  with  carbon  duplicates,  so  that  a  requisition  when 
filled  out  may  be  readily  traced  if  lost. 

Each  department  shall  be  known  by  a  key  number  as 
follows : 

Cutting  Department  — 1001 

Stitching  2001 

Sole  Leather  3001 

Bottoming  4001 

Finishing  5001 

Packing  "              6001 

Shipping  "              7001 

Office  8001 

Power  9001 

These  requisitions  shall  before  being  issued  be  numbered 
consecutively,  using  the  keyed  numbers  as  1001,  1002,  1003. 

Each  department  by  this  method  will  have  an  oppor- 
tunity to  use  999  slips,  when  the  numbers  shall  be  repeated. 

The  best  results  can  be  obtained,  especially  in  the  ac- 
counting part  of  the  work,  by  requiring  the  foreman  of  each 
department,  so  far  as  possible,  to  make  a  requisition  each 
Saturday  for  his  wants  to  be  delivered  the  following  Monday. 

These  Forms  No.  11  should  be  posted  daily  on  Ledger 
Form  No.  10,  entering  requisition  number  and  quantity 
only. 

At  the  end  of  each  Period  the  disbursements  of  the  ledger 
shall  be  extended  and  the  ledger  balanced. 

After  the  ledger  has  been  balanced,  a  trial  balance  should 
be  drawn  on  to  Form  No.  12,  which  is  called  "Stock  Room 
Report." 

Thus  the  exact  amount  of  material  charged  to  each 
department  is  shown,  and  from  the  report  of  the  shoes  pro- 
duced by  each  department  will  be  found  the  actual  cost  to 


58     COMPREHENSIVE  ACCOUNTING  METHODS 

compare  with  the  estimates.  (See  Condensed  Reports, 
Numbers  3,  4  and  5,  in  Chapter  7.) 

Results  of  Productive  Labor  shall  be  shown  on  Form 
No.  13.  The  output  of  each  department  shall  be  entered 
daily  thereon,  and  the  actual  costs  found  from  the  weekly 
payroll.  A  similar  form  will  be  used  for  cumulative  figures. 
(See  Report  No.  6,  Chapter  7,  for  condensed  results  of  the 
operations  of  the  fourth  period.) 

As  the  shoes  are  packed  and  ready  to  ship,  copies  of 
the  production  sheets  shall  be  handed  to  a  clerk  for  entry 
on  a  Production  Record,  Form  No.  14.  The  totals  of  these 
sheets  will  be  used  for  many  purposes,  but  chiefly  to  get  the 
various  debits  and  credits  which  will  be  made  to  show  the 
values  of  all  assets  and  the  total  of  estimated  profits. 

Many  percentage  figures  can  be  made  from  the  above 
totals,  and  the  reader  is  referred  to  Chapter  8  for  details. 

Exhibit  No.  7  shows  the  daily  production  records  of  shoes 
entering  the  works.  The  end  of  Period  4  was  February  1, 
1913,  or  work  day  No.  106.  There  had  been  entered 
at  that  date  315,089  pairs  of  shoes,  of  which  261,125  pairs 
had  been  packed,  or  all  production  sheets  up  to  and  in- 
cluding work  day  No.  88. 

The  total  value  of  these  shoes  at  selling  prices  was 
$658,035. 

The  last  sheet  was  put  into  the  factory  March  21,  1913, 
and  was  work  day  No.  146. 

The  total  output  for  twenty-six  weeks  was  417,933  pairs 
or  17,993  pairs  more  than  the  estimate. 

Chapter  7  is  devoted  to  the  reports  of  the  business 
at  close  of  Period  No.  4. 


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60      COMPREHENSIVE  ACCOUNTING  METHODS 


(Form  N 

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55  Small,  Nichols  &  Co.,  Inc.,  Boston 

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Fact.  Cost 

Sell.  Cost 

(Form  No.  U) 

Sample  or 
Group  No. 

Sell.  Exp. 

Sell.  Price 

Sell.  Disc. 

Fig.  Profit 

Period  1 

Period  2 

Period  3 

Period 

4 

Period  5 

Period  6 

Date 
or 
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No. 

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Date 
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64    COMPREHENSIVE  ACCOUNTING  METHODS 


EXHIBIT  No.  7 

DAILY  SCHEDULE  OF  SHOES  ENTERED  INTO  THE  WORKS;  Two  SHEETS 
EACH  DAY  EXCEPT  SATURDAYS,  WHEN  ONLY  ONE  WAS  PUT  IN 


PERIOD   WORK 
NO.     DAY  NO. 


DATES 


PAIRS 


1 

1 

Sept. 

30 

2,650 

1 

2 

Oct. 

1 

2,750 

1 

3 

tt 

2 

2,900 

,- 

1 

4 

« 

3 

3,000 

1 

5 

tt 

4 

3,040 

1 

6 

« 

5 

1,527 

1 

7 

« 

7 

3,156 

1 

8 

tt 

8 

3,160 

1 

9 

« 

9 

3,140 

1 

10 

tt 

10 

3,138 

1 

11 

tt 

11 

3,134 

1 

12 

« 

12 

1,572 

1 

13 

tt 

14 

3,290 

1 

14 

« 

15 

3,284 

1 

15 

t( 

16 

3,278 

1 

16 

a 

17 

3,294 

1 

17 

« 

18 

3,236 

1 

18 

n 

19 

1,638 

1 

19 

ft 

21 

3,300 

1 

20 

tt 

22 

3,294 

1 

21 

tt 

23 

3,286 

1 

22 

tt 

24 

3,274 

1 

23 

«< 

25 

3,258 

1 

24 

tt 

26 

1,642 

1 

25 

tt 

28 

3,273 

1 

26 

tt 

29 

3,278 

1 

27 

tt 

30 

3,270 

1 

28 

tt 

31 

3,264 

1 

29 

Nov. 

1 

3,281 

1 

30 

« 

2 

1,636 

Half  Day  Average,  1,586 

Total 

87,243 

COMPREHENSIVE  ACCOUNTING  METHODS     65 


PERIOD   WORK 

NO.     DAY  NO.             DATES                    PAIRS 

2 

31 

Nov.    4 

3,290 

2 

32 

"        5 

3,286 

2 

33 

6 

3,280 

2 

34 

7 

3,292 

2 

35 

"        8 

3,295 

2 

36 

9 

1,644 

2 

37 

"      11 

3,278 

2 

38 

"      12 

3,282 

2 

39 

"      13 

3,276 

2 

40 

"      14 

3,270 

2 

41 

"      15 

3,278 

2 

42 

"      16 

1,640 

2 

43 

"      18 

3,288 

2 

44 

"      19 

3,290 

2 

45 

"      20 

3,282 

2 

46 

"      21 

3,284 

2 

47 

"      22 

3,290 

2 

48 

"      23 

1,650 

2 

49 

"      25 

3,322 

2 

50 

"      26 

3,316 

2 

51 

"      27 

3,318 

2 

52 

"      29 

3,334 

2 

53 

"      30 

1,662 

Half  Day  Average,  1,608 

Total 

69,147 

« 

to  date 

156,390 

66     COMPREHENSIVE  ACCOUNTING  METHODS 


PERIOD  WORK 
NO.    DAY  NO. 


DATES 


3 

54 

Dec.     2 

3,266 

3 

55 

3 

3,270 

3 

56 

4 

3,260 

3 

57 

"        5 

3,265 

3 

58 

6 

3,272 

3 

59 

7 

1,633 

3 

60 

9 

3,270 

3 

61 

"      10 

3,280 

3 

62 

"      11 

3,268 

3 

63 

"      12 

3,274 

3 

64 

"      13 

3,258 

3 

65 

"      14 

1,638 

3 

66 

"      16 

3,268 

3 

67 

"      17 

3,278 

3 

68 

"      18 

3,266 

3 

69 

"      19 

3,270 

3 

70 

"      20 

3,260 

3 

71 

"      21 

1,634 

3 

72 

"      23 

3,328 

3 

73 

"      24 

3,322 

3 

74 

"      26 

3,334 

3 

75 

"      27 

3,328 

3 

76 

"      28 

1,664 

Half  Day  Average,  1,640 

Total 

68,906 

« 

to  date 

225,296 

COMPREHENSIVE  ACCOUNTING  METHODS     67 


PERIOD   WORK 
NO.     DAY  NO. 


DATES 


PAIRS 


4 

77 

Dec.  30 

3,249 

4 

78 

"      31 

3,254 

4 

79 

Jan.     1 

3,246 

4 

80 

"        2 

3,242 

4 

81 

"        3 

3,255 

4 

82 

4 

1,624 

4 

83 

"        6 

3,266 

4 

84 

7 

3,270 

4 

85 

8 

3,262 

4 

86 

"        9 

3,260 

4 

87 

"      10 

3,269 

4 

88 

"      11 

1,632 

4 

89 

"      13 

3,274 

4 

90 

"      14 

3,280 

4 

91 

"      15 

3,272 

4 

92 

"      16 

3,270 

4 

93 

"      17 

3,278 

4 

94 

"      18 

1,638 

4 

95 

"      20 

3,276 

4 

96 

"      21 

3,282 

4 

97 

"      22 

3,270 

4 

98 

"      23 

3,278 

4 

99 

"      24 

3,268 

4 

100 

"      25 

1,638 

4 

101 

"      27 

3,262 

4 

102 

"      28 

3,270 

4 

103 

"      29 

3,264 

4 

104 

"      30 

3,263 

4 

105 

"      31 

3,251 

4 

106 

Feb.     1 

1,630 

Half  Day  Average,  1,632 

Total 

89,793 

« 

to  date 

315,089 

68     COMPREHENSIVE  ACCOUNTING  METHODS 


PERIOD   WORK 
NO.    DAY  NO. 


DATES 


PAIRS 


5 

107 

Feb.     3 

3,254 

5 

108 

4 

3,252 

5 

109 

"        5 

3,263 

5 

110 

"        6 

3,248 

5 

111 

7 

3,252 

5 

112 

8 

1,627 

5 

113 

"      10 

3,264 

5 

114 

"      11 

3,256 

5 

115 

"      12 

3,248 

5 

116 

"      13 

3,254 

5 

117 

"      14 

3,274 

5 

118 

"      15 

1,630 

5 

119 

"      17 

3,318 

5 

120 

"      18 

3,314 

5 

121 

"      19 

3,322 

5 

122 

"      20 

3,319 

5 

123 

"      21 

1,659 

5 

124 

"      24 

3,238 

5 

'125 

"      25 

3,234 

5 

126 

"      26 

3,240 

5 

127 

"      27 

3,232 

5 

128 

"      28 

3,240 

5 

129 

Mar.    1 

1,618 

Half  Day  Average,  1,632 

Total 

68,556 

a 

to  date 

383,645 

COMPREHENSIVE  ACCOUNTING  METHODS     69 


PERIOD   WORK 
NO.    DAY  NO. 


DATES 


PAIRS 


6 

130 

Mar.    3 

2,570 

6 

131 

4 

2,568 

6 

132 

5 

2,572 

6 

133 

6 

2,564 

6 

134 

"        7 

2,568 

6 

135 

8 

1,284 

6 

136 

"      10 

2,220 

6 

137 

"      11 

2,216 

6 

138 

"      12 

2,224 

6 

139 

"      13 

2,226 

6 

140 

"      14 

2,214 

6 

141 

"      15 

1,110 

6 

142 

"      17 

1,600 

6 

143 

"      18 

1,612 

6 

144 

"      19 

1,600 

6 

145 

"      20 

1,600 

6 

146 

"      21 

1,600 

Half  Day  Average,  1,073 

Total 

34,348 

Half  Day  Average 

f™  CUoc™      1   ££2  ft 

H 

to  date 

417,993 

1 


CHAPTER  7 
DETAILED  REPORTS 

reports  indexed  below  are  tabulated  from  the 
daily  and  weekly  figures,  and  show  the  condition 
of  the  business  at  the  end  of  Period  No.  4. 


Report  No.    1.  Upper  Material 

"      2.  Bottom 

"      3.  Supplies 

"      4.  Findings 

"      5.  Excess  Findings    " 

"      6.  Productive  Labor 

"      7.  Non-Productive  Labor 

"        "      8.  Operative  Expense,  Royalty  and  Deprecia- 
tion 

"      9.  Distributive  Expense 

"    10.  Complete     Cost     Statement  —  Report     of 

Above-Mentioned  Period 

"    11.  Copy  of  Trial  Balance 

"    12.  Balance  Sheet 


71 


72     COMPREHENSIVE  ACCOUNTING  METHODS 

REPORT  No.  1 

UPPER  MATERIAL 

For  Period  No.  4-     Beginning  Dec.  SO,  1912  and  ending  Feb. 
1, 1913. 


WORK 

PAIRS 

DAY 

CUT 

ESTIMATE 

COST 

GAINS 

LOSSES 

77 

3,249 

$2,238.94 

$2,229.58 

$9.36 

78 

3,254 

2,228.17 

2,225.10 

3.07 

79 

3,246 

2,246.93 

2,231.80 

15.13 

80 

3,242 

2,234.20 

2,227.69 

6.51 

81 

3,255 

2,240.45 

2,241.73 

$1.28 

82 

1,624 

1,111.88 

1,110.73 

1.15 

83 

3,266 

2,251.86 

2,236.86 

15.00 

84 

3,270 

2,260.79 

2,236.34 

24.45 

85 

3,262 

2,224.27 

2,226.12 

1.85 

86 

3,260 

2,236.91 

2,238.35 

1.44 

87 

3,269 

2,244.01 

2,237.57 

6.44 

88 

1,632 

1,125.42 

1,115.35 

10.07 

89 

3,274 

2,246.40 

2,244.54 

1.86 

90 

3,280 

2,252.68 

2,244.74 

7.94 

91 

3,272 

2,253.26 

2,239.29 

13.97 

92 

3,270 

2,242.79 

2,233.86 

8.93 

93 

3,278 

2,261.40 

2,251.29 

10.11 

94 

1,638 

1,128.59 

1,121.24 

7.35 

95 

3,276 

2,244.11 

2,246.21 

2.10 

96 

3,282 

2,262.03 

2,248.08 

13.95 

97 

3,270 

2,242.76 

2,247.82 

5.06 

98 

3,278 

2,260.39 

2,252.25 

8.14 

99 

3,268 

2,243.40 

2,244.82 

1.42 

100 

1,638 

1,132.55 

1,130.57 

1.98 

101 

3,262 

2,230.36 

2,238.56 

8.20 

102 

3,270 

2,254.29 

2,249.30 

4.99 

103 

3,264 

2,238.75 

2,244.41 

5.66 

104 

3,263 

2,243.87 

2,237.26 

6.61 

105 

3,251 

2,236.67 

2,229.35 

7.32 

106 

1,630 

1,121.97 

1,114.84 

7.13 

Totals 

89,793 

$61,740.10 

$61,575.65 

$191.46 

$27.01 

61,575.65 

27.01 

Net  Gain  $164.45 

Buying  and  Sorting 

Total  Gain 


$164.45 
$1,274.34 

$1,438.79 


These  figures  are  entered  day  by  day  and  totaled  at  end  of  period. 


COMPREHENSIVE  ACCOUNTING  METHODS     73 

REPORT  No.  2 
BOTTOM  MATERIAL 

For  Period  No.  4-     Beginning  Dec.  30,  1912,  and  ending  Feb. 
1,  1913. 


WK.  DAY 

PAIRS 

ESTIMATE 

COST 

GAINS 

LOSSES 

70 

3,260 

$1,824.63 

$1,818.33 

$6.30 

71 

1,634 

901  .  56 

905.11 

$3.55 

72 

3,328 

1,854.49 

1,855.44 

.95 

73 

3,322 

1,858.25 

1,850.20 

8.05 

74 

3,334 

1,864.05 

1,857.11 

6.94 

75 

3,328 

1,851.49 

1,854.93 

3.44 

76 

1,664 

925.24 

926.32 

1.08 

77 

3,249 

1,819.08 

1,816.40 

2.68 

78 

3,254 

1,812.93 

1,803.96 

8.97 

79 

3,246 

1,815.82 

1,805.31 

10.51 

80 

3,242 

1,815.26 

1,809.78 

5.48 

81 

3,255 

1,810.88 

1,813.93 

3.05 

82 

1,624 

912.53 

906.59 

5.94 

83 

3,266 

1,819.07 

1,823.19 

4.12 

84 

3,270 

1,831.21 

1,826.61 

4.60 

85 

3,262 

1,817.81 

1,820.00 

2.19 

86 

3,260 

1,827.72 

1,822.84 

4.88 

87 

3,269 

1,819.41 

1,823.42 

4.01 

88 

1,632 

914.28 

909.05 

5.23 

89 

3,274 

1,828.53 

1,824.10 

4.43 

90 

3,280 

1,826.80 

1,821.15 

5.65 

91 

3,272 

1,827.96 

1,821.46 

6.50 

92 

3,270 

1,825.60 

1,815.94 

9.66 

93 

3,278 

1,831.15 

1,824.17 

6.98 

94 

1,638 

916.90 

913.64 

3.26 

95 

3,276 

1,825.34 

1,827.13 

1.79 

96 

3,282 

1,834.63 

1,829.99 

4.64 

97 

3,270 

1,823.42 

1,817.39 

6.03 

98 

3,278 

1,832.86 

1,824.24 

8.62 

99 

3,268 

1,819.98 

1,823.18 

3.20 

Totals 

90,085 

$50,288.88 

$50,190.91 

$125.35 

$27.38 

50,190.91 

27.38 

Net  Gain  $97.97 

Buying,  Cutting  and  Sorting 

Total  Gain 


$97.97 
$1,633.62 

$1,731.59 


These  figures  are  made  day  by  day  and  only  require  to  be 
totaled  at  end  of  month. 


74     COMPREHENSIVE  ACCOUNTING  METHODS 


REPORT  No.  3 
SUPPLIES  MATERIAL 

For  Period  No.  4-     Beginning  Dec.  30,  1912,  and  ending  Feb. 
1, 1913. 


OPERATING 

BUYING 

ARTICLES 

ESTIMATE 

COST 

GAIN 

LOSS 

GAIN 

LOSS 

Buttons 

$49.84 

$49.84 

Cartons,  Case  and 

Tissue 

3,141.91 

3,096.42 

$44.49 

Eyelets  and  Hook 

1,781.02 

1,770.06 

$10.96 

Heel  Pads 

224.42 

220.20 

4.22 

Inside  Labels 

445.60 

404.50 

41.10 

Lace  or  Ribbons 

897.69 

926.00 

$26.31 

Pull  Straps 

534.00 

527.40 

6.60 

Shanks 

425.80 

420.32 

4.48 

$7,500.28 

$7,414.74 

$44.49 

$67.36 

$26.31 

26.31 

7,414.74 

41.05 

$41.05 

Net  Profit 


$85.54 


$85.54 


This  buying  profit  is  not  treated  as  on  Reports  Nos.  1  and 
2,  because  our  estimates  are  not  made  on  a  sorting  basis.  Figures 
drawn  from  Store  Department  Report,  see  Form  No.  12. 


COMPREHENSIVE  ACCOUNTING  METHODS     75 


REPORT  No.  4 
FINDINGS  MATERIAL 

For  Period  No.  4.     Beginning  Dec.  SO,  1912,  and  Ending  Feb. 
1,  1913. 


DEPARTMENTS 

ESTIMATE 

COST 

GAIN 

LOSS 

Cutting 

$90.03 

$82.87 

$7.16 

Stitching 

1,125.84 

1,014.85 

110.99 

Stock  Fitting 

378.28 

392.06 

$13.78 

Lasting 

1,215.93 

1,169.85 

46.08 

Bottoming 

3,178.62 

2,983.71 

194.91 

Finishing 

405.24 

428.08 

22.84 

Packing 

450.19 

468.05 

17.86 

Totals 

$6,844.13 

$6,539.47 

$359.14 

$54.48 

6,539.47 

54.48 

Net  Gain  $304.66  $304.66 

Figures  drawn  from  Store  Department  Report,  see  Form  No.  12. 


76     COMPREHENSIVE  ACCOUNTING  METHODS 


REPORT  No.  5 

EXCESS  FINDINGS  MATERIAL 

For  Period  No.  4-     Beginning  Dec.  30,  1912,  and  ending  Feb. 
1, 1913. 


DEPARTMENTS 

ESTIMATE 

COST 

GAIN 

LOSS 

Stitching 
Packing 

$226.52 
267.40 

$212.82 
255.90 

$13.70 
11.50 

Totals 

$493.92 
468.72 

$468.72 

$25.20 

Net  Gain  $25.20  $25.20 

Figures  drawn  from  Store  Department  Report,  see  Form  No.  12, 


COMPREHENSIVE  ACCOUNTING  METHODS     77 


REPORT  No.  6 

PKODTJCTIVE  LABOR 

For  Period  No.  4-     Beginning  Dec.  30,  1912,  and  ending  Feb. 
1,  1913. 


DEPARTMENTS 

ESTIMATE 

COST 

GAIN 

LOSS 

Cutting 

$5,176.89 

$5,043.44 

$133.45 

Stitching 

8,520.34 

8,365.66 

154.68 

Stock  Fitting 

1,107.82 

1,094.12 

13.70 

Lasting 

4,503.45 

4,593.02 

$89.57 

Bottoming 

19,368.89 

19,123.97 

244.92 

Finishing 

3,259.92 

3,077.28 

182.64 

Packing 

2,476.05 

2,578.37 

102.32 

Totals 

$44,413.36 

$43,875.86 

$729.39 

$191.89 

43,875.86 

191.89 

Net  Gain  $537.50  $537.50 

Figures  drawn  from  Labor  Report,  see  Form  No.  13. 


78     COMPREHENSIVE  ACCOUNTING  METHODS 


REPORT  No.  7 
NON-PRODUCTIVE  LABOR 

For  Period  No.  4-     Beginning  Dec.  30,  1912,  and  ending  Feb. 
1,  1913. 


DIVISIONS 

ESTIMATE 

COST 

DECREASE 

INCREASE 

Executive 

$1,450.00 

$1,450.00 

Superintendence 

1,765.00 

1,788.00 

$23.00 

Office 

750.00 

875.00 

125.00 

Sundries 

405.00 

425.00 

20.00 

$4,370.00 

$4,538.00 

$168.00 

4,538.00 

Net  Increase      $168.00 

Total  Pairs 

Packed  90,038 

Estimate  $5. 68 

per  100  pairs,     $5,114 . 16 

Net  Gain  for  Period 


$168.00 


$5,114.16 
$576.16 


NOTE:  The  estimate  was  actually  increased  by  $168.00 
while  the  production  increased  13,118  pairs.  Figured  at  $5.68 
per  hundred  =  $745.10.  Deduct  $168.00  and  balance  left  = 
$577.10.  The  difference  of  94  cents  is  caused  by  not  carrying  three 
decimal  places. 


COMPREHENSIVE  ACCOUNTING  METHODS     79 


REPORT  No.  8 

OPERATIVE  EXPENSE,  ROYALTY  AND  DEPRECIATION 
For  Period  No.  4-     Beginning  Dec.  30,  1912,  and  ending  Feb. 


1,  1913. 


DIVISIONS 

ESTIMATE 

COST 

DECREASE 

INCREASE 

Rent 

$865.39 

$865.39 

Taxes 

384.61 

384.61 

Insurance 

288.46 

279.85 

$8.61 

Interest 

769.23 

731.15 

38.08 

Power  and  Heat 

384.61 

372.00 

12.61 

Freight  and  Express 

1,153.85 

1,127.82 

26.03 

Water,  Light,  Tel.,  etc. 

192.31 

185.10 

7.21 

Machinery  Repairs 

769.23 

715.90 

53.33 

Factory  Equip.  Repairs 

192.31 

209.80 

$17.49 

Extra  Cost  of  Samples 

384.61 

354.60 

30.01 

Office  Supplies 

576.92 

544.25 

32.67 

Sundries 

384.61 

317.31 

67.30 

Shoe  Loss  Allowance 

1,346.15 

956.28 

389.87 

Totals 

$7,692.29 

$7,044.06 

$665.72 

$17.49 

7,044.06 

17.49 

Net  Decrease 


$648.23 


$648.23 


Total  Pairs 

Packed  90,038 

Estimate  at  lOc.    $9,003 . 80  $9,003.80 

Net  Gain  for  Period  $1,959 . 74 

NOTE:  The  estimate  was  actually  reduced  by  $648.23,  while 
the  production  output  went  from  the  estimate  76,920  to  90,038, 
equal  to  a  gain  of  $1,311.80  plus  the  $648.23  =  $1,960.03.  The 
difference  of  29  cents  is  caused  by  not  carrying  out  all  figures  in 
three  decimal  places. 

The  estimate  was  beaten  in  two  ways,  more  output  and 
less  cost. 

Royalty  $5,161.20    $5,161.20.  No  gain  or  loss  considered. 

Depreciation      4,501.90      3,846.00.     Gain  =  $655.90. 


80     COMPREHENSIVE  ACCOUNTING  METHODS 


REPORT  No.  9 
DISTRIBUTIVE  EXPENSE 

For  Period  No.  4-     Beginning  Dec.  30,  1912,  and  ending  Feb. 
1,  1913. 


DIVISIONS 

ESTIMATE 

COST 

DECREASE 

INCREASE 

Selling  Labor 
Advertising 
Mercantile  Agencies,  etc. 
Sundries 

$1,375.00 

3,846.15 
192.31 
355.77 

$1,390.00 
3,820.12 
200.00 
320.16 

$26.03 

35.61 

$15.00 

7.69 

Totals 

$5,769.23 
5,730.28 

$5,730.28 

$61.64 
22.69 

$22.69 

Net  Decrease 

Total  Pairs  Shipped 
Same  as  Packed  90,038 


$38.95 


$38.95 


at  7  \  cents  each 


$6,752. 85  $6,752. 85 


Gain  for  Period 


1,022.57 


Bad  Debts  Loss  .500%      1,131.09      922 . 06 
Gain  209.03 


Salesmen's  Costs 


12,441.9812,976.70 


Loss 


534.72 


The  sales  figured  $226,217.88.      The  average  price  therefore 
was  $2.51  \  per  pair.     Discount  figured  on  this  amount. 
Total  Distributive  was  as  follows : 

Gain  on  Expense  $1,022 . 57 

"    "    Bad  Debts  209.03 

Loss  "  Salesmen's  Cost  $534.72 

Net  Gain  696.88 


Discount  2% 


$1,231. 60  $1,231. 60 

$4,524 . 36  $3,860 . 75.  Gain  $663 . 61 


Discount  saved  on  accounts  paid  net  is  deducted  from 
the  estimate  at  2%,  and  is  a  gain. 


COMPREHENSIVE  ACCOUNTING  METHODS     81 

REPORT  No.  10 

COMPLETE  COST  STATEMENT 
For  Period  No.  4.     Beginning  Dec.  30,  1912,  and  ending  Feb.  1,  1913. 


PRODUCING  AND  DISTRIBUTING 

SORTING 

FROM  REPORTS 

ESTIMATE 

COST 

GAIN 

LOSS 

GAIN 

LOSS 

No.  1.  Upper  Ma- 

Material 

$61,740.10 

$61,575.65 

$164.45 

$1,274.34 

2.  Bottom 

Material 

50,288.88 

50,190.91 

97.97 

1,633.62 

3.  Supplies 

Material 

7,500.28 

7,414.74 

85.54 

"     4.  Findings 

Material 

6,844.13 

6,539.47 

304.66 

"     5.  Excess 

Fdgs.  Ma. 

493.92 

468.72 

25.20 

Total  Material 

$126,867.31 

$126,189.49 

$677.82 

$2,907.96 

Purchase  Disc.  4% 

5,100.98 

5,079  .  29 

$21.69 

Net.  Mat.  Totals 

$121,766.33 

$121,110.20 

$656.13 

$2,907.96 

No.  6.  Productive 

Labor 

44,413.36 

43,875.86 

537.50 

"     7.  Non-Prod. 

Labor 

5,114.16 

4,538.00 

576.16 

"     8.  Operative 

Expense 

9,003  .  80 

7,044.06 

1,959.74 

"     8.  Royalty 
8.  Deprecia- 

5,161.20 

5,161.20 

tion 

4,501.90 

3,846.00 

655.90 

Manufacturing 

Complete 

$189,960.75 

$185,575.32 

$4,385.43 

$2,907.96 

Total      Manufac- 

turing   Gain     or 

Loss 

$7,293.39 

No.  9.  Distrib't'e 

Expenses 

6,752.85 

5,730.28 

1,022.57 

"    9.  Bad  Debts 

Losses 

1,131.09 

922.06 

209.03 

"     9.  Salesmen's 

Costs 

12,441.98 

12,976.70 

$534.72 

9.  Discount 

4,524.36 

3,860.75 

663.61 

Total  Distributive  $24,850.28  $23,489.79  $1,895.21  $534.72 
Net  Distributive  Profit  1,360.49 

Net  Total  Profit  $8,653 . 88 

Profits  drawn  from 

Figuring  Sheets 

(See  Form  No.  1)  $11,672.88 

Total  Gain  for  Period  No.  4  $  20,326 . 76 

This  period  was  used  partly  because  it  should  show  a 
greater  profit  than  any  other  period,  except  Period  No.  5. 
Periods  1  and  6  are  liable  to  show  losses  because  of  small 
output. 


82     COMPREHENSIVE  ACCOUNTING  METHODS 


For  Period  No,  4. 


REPORT  No.  11 
COPY  OF  TRIAL  BALANCE 
Beginning  Dec.  30,  1912,  and  ending  Feb.  1,  1913. 


ACCT.    NO.                     ACCOUNT    NAMES 

DEBITS 

CREDITS 

101     Capital  Stock 

$600,000  .  00 

102     Surplus 

63,309.85 

103     Reserves  for  Machinery  and  Equipment 

Depreciation 

89,175.60 

104     Reserves  for  Shrinkage  of  Accounts  Re- 

ceivable 

2,464.10 

105     Notes  Payable 

180,000.00 

106     Accounts  Payable 

12,219.50 

107     Discounts  Anticipated  on  Accounts  Re- 

ceivable 

12,430.82 

108     Discounts  on  Raw  Merchandise  Used 

7,471  .  93 

201     Cash  in  Banks 

$54,632.80 

202       "       "  Office 

500.00 

203     Accounts  Receivable  Ledgers 

553,915.96 

204     Personal  Accounts 

9,666.84 

205     Notes  Receivable 

6,460.00 

206     Stores  Department  Upper  Ledger 
207                                        Bottom  Ledger 

69,121.22 
67,238.14 

208         "                             Sundries  Ledger 

27,525.75 

209     Goods  in  Process 

77,571.37 

210     Finished  Shoes  and  Sales 

211     Returned  and  Damaged  Shoes 

2,274.30 

212     Machinery 

76,221.83 

213     Equipment  and  Fixtures 

21,636.75 

214     Lasts,  Sole  Patterns  and  Dies 

25,223.92 

215     Upper  Patterns  and  Dies 
216     Labor  Productive 

10,768.77 

217         "       Non-Productive 

218     Insurance 

194.51 

219     Interest 

2,993.38 

220     Taxes 

2,514.50 

221     Discounts  Anticipated  on  Accounts  Pay- 

able 

588.78 

301     Operative  Expenses 

302     Administrative  Expenses 

1,013.26 

303     Distributive  Expenses 

401     Operation  Gain  and  Loss 

10,625.91 

402     Distribution  Gain  and  Loss 

2,319.56 

403     Figured  Profit 

34,683.93 

404     Final  Gain  and  Loss 

Totals 


$1,012,381.64    $1,012,381.64 


COMPREHENSIVE  ACCOUNTING  METHODS     83 

REPORT  No.  12 

BALANCE  SHEET 

For  Period  No.  4.     Ending  Feb.  1,  1913. 

ASSETS 
QUICK  ASSETS: 

Cash  $55,132.80 

Accounts  Receivable  —  Less  Dis- 
counts and  Reserves  539,021 . 04 

Notes  Receivable  6,460 . 00 

Raw  Merchandise  —  Less    Dis- 
counts 156,413 . 18 

Returned  and  Damaged  Shoes,  Net  2,274 . 30 

Shoes  in  Process,  Net  77,571 . 37 


Total  Quick  Assets  $836,872 . 69 

INVESTMENT  : 

Machinery  and  Equipment  133,851.27 

DEFERRED  ASSETS: 

Personal  Accounts  Receivable  $9,666 . 84 

Prepaid  Items  5,702.39 


Total  Deferred  Assets  15,369 . 23 


Total  Assets  $986,093 . 19 

LIABILITIES 

CURRENT  LIABILITIES: 

Notes  Payable  $180,000 . 00 
Accounts  Payable  Net  11,630 . 72 

Total  Current  Liabilities  $191,630 . 72 

Capital  $600,000.00 
Surplus  63,309.85 

Depreciation  89,175 . 60 

Net  Profit  to  Date  6.3%  on  Sales  41,977 . 02 


Total  Capital  794,462.47 

Total  Liabilities  $986,093 . 19 

Net  Quick  Assets  $625,241 . 97 


CHAPTER  8 
PERCENTAGE  ESTIMATES 

AS  stated  in  Chapter  4,  control  over  a  shoe  manufac- 
turing business  may  be  exercised  by  using  a  simple 
percentage  cost  system.  It  may  be  based  upon 
Total  Manufacturing  Cost,  Total  Cost,  or  Selling  Price. 
(See  Form  No.  1,  or  Exhibit  No.  8.) 

It  will  not  be  wise  for  the  writer  to  attempt  to  make  a 
mandatory  rule  as  a  guide  for  the  construction  of  such  a 
system.  Each  manufacturing  business  must  be  considered 
independently,  and  the  base  to  be  used  chosen  after  full 
knowledge  of  certain  conditions  has  been  acquired. 

In  arranging  a  system  where  the  variation  from  the 
average  price  is  as  slight  as  in  the  illustration  used  in  the 
foregoing  chapters,  it  will  be  immaterial  whether  the  base 
used  is  the  Total  Cost  or  the  Selling  Price. 

The  Selling  Price  was  used  in  these  illustrations  for 
several  reasons,  two  of  which  are  given  below. 

First,  because  all  shoes  were  to  be  estimated  on  a  profit 
basis  of  a  fixed  per  cent. 

Second,  because  the  cheapest  shoes  were  $2.40  and  the 
highest  $2.60,  but  practically  all  shoes  were  $2.50. 

On  Exhibit  No.  8  the  average  price  is  shown  for  the  season 
as  $2.50J,  and  the  net  profit  was  6.593%.  The  total  net 
profit  after  deducting  $2,000  for  administrative  expenses 
was  $69,043.87,  or  $9,043.87  more  than  the  estimate.  (See 
Exhibit  No.  1.) 

85 


86     COMPREHENSIVE  ACCOUNTING  METHODS 

To  illustrate  more  clearly  the  percentage  method,  the 
reader's  attention  is  called  to  the  "Total  Upper  Cost,"  which 
was  for  the  season  27%  of  the  average  Selling  Price.  The 
first  day  of  the  season  the  cutting  department  was  started 
with  2,650  pairs,  the  sales  value  being  at  $2.50  per  pair, 
$6,625.  The  cutting  department  material  estimate  at 
27%  was  therefore  $1,788.75.  The  report  of  that  day's 
work  shows  the  actual  cost  to  have  been  $1,792.85  or  a  loss 
from  the  estimate  of  $4.10.  The  basis  of  the  allowance  for 
the  shoes,  estimated  on  Form  No.  1,  allowed  a  possible 
increase  of  a  little  less  than  one-half  of  one  per  cent  on  the 
selling  price,  to  be  exact,  .00453+.  Therefore,  the  cutting 
department  costs  could  have  been  proved  at  the  end  of  a 
period  by  figuring  cost  of  total  material  used  against  selling 
price,  and  the  approximate  profit  or  loss  could  have  been 
easily  determined.  If  the  cost  had  in  this  case  exceeded 
27J%,  losses  would  have  been  accumulating. 

To  compile  statistics  of  gains  and  losses,  it  is  only  neces- 
sary to  figure  the  per  cent  of  increase  or  decrease. 

The  27%  can  be  divided  so  as  to  get  the  pro  rota  of 
outside,  lining  and  trimming,  if  desired. 

The  sole  and  all  other  parts  of  the  shoe  can  be  treated  in 
the  same  manner.  A  careful  analysis  of  Exhibit  No.  8, 
by  a  manufacturer  or  accountant,  will  suggest  ways  to  keep 
costs  without  much  clerical  expense.  It  is  ridiculous  —  the 
immense  amount  of  money  being  spent  by  some  manufacturers 
for  cost  keeping.  There  ;^is  no  method  known  of  making 
comparative  statistics  equal  to  the  percentage  method. 
Facts  can  be  brought  out  regarding  a  business  for  a  period 
of  years  or  for  a  number  of  concerns  for  any  period  desired. 

As  stated  in  Chapters  1  and  2,  comparative  statistics 
are  very  difficult  to  get  because  there  is  no  uniformity  in 
methods  of  accounting. 


COMPREHENSIVE  ACCOUNTING  METHODS     87 

On  Exhibit  No.  8  appears  "Excess  Findings"  at  50  cents 
per  hundred  pairs,  but  no  figures  are  used  in  the  detailed 
estimate  on  Form  No.  1.  That  particular  shoe  did  not 
carry  an  allowance.  The  basis  was  25%  of  the  product  at 
$2.00  per  hundred,  consequently,  in  the  general  estimate 
it  stood  at  50  cents  per  hundred  pairs. 


COMPREHENSIVE  ACCOUNTING  METHODS 


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CHAPTER  9 
ACCOUNTING  AND  AUDITING 

AFTER  finishing  with  the  accounting  systems  it  seems 
appropriate  to  write  a  short  chapter  on  the  above 
subject  and  look  at  the  relation  of  the  Public 
Accountant  to  the  shoe  manufacturing  business. 

When  the  writer  first  began  urging  shoe  manufacturers 
to  employ  public  accountants,  there  were  scarcely  five  states 
in  the  Union  which  conferred  titles  such  as  "Certified  or 
Chartered  Public  Accountant." 

This  title  has  been  very  misleading  to  many  Americans. 
They  suppose  it  to  be  a  guarantee  of  excellence  and  efficiency; 
that  a  holder  of  the  title  is  possessed  of  all  accounting  knowl- 
edge and  is  efficient  and  honest  in  every  respect. 

As  a  matter  of  fact,  there  are  Certified  Public  Accountants 
who  have  had  no  business  experience  and  others  who  are 
not  only  inefficient,  but  dishonest. 

It  is  a  lamentable  truth  that  many  accountants  are 
grafters.  In  fact,  some  of  the  largest  auditing  concerns  in 
the  country  order  their  men  to  make  a  job  last  a  certain 
length  of  time,  and  it  is  practically  impossible  to  prove  the 
charge  when  the  grafting  takes  this  form.  An  accountant 
who  is  a  grafter  is  one  of  the  most  contemptible  of  all 
grafters,  because  of  the  peculiar  position  of  trust  he  holds. 

If  it  is  deemed  necessary  that  the  state  must  protect  the 
public  by  an  examination  and  the  granting  of  a  certificate, 

89 


90     COMPREHENSIVE  ACCOUNTING  METHODS 

then  it  should  grant  two  distinct  titles,  because  there  are  two 
distinct  classifications  under  which  accountants  should  be 
recorded.  These  two  classifications  are  Constructive  Ac- 
countants or  Industrial  Engineers  and  Auditors. 

The  first  and  most  important  is  the  business  counsel, 
who  must  be  a  broad  gauge  accountant,  qualified  to  investi- 
gate or  organize  a  business.  He  frequently  does  business 
under  the  title  of  Industrial  Engineer,  Efficiency  Engineer, 
or  Industrial  Expert,  etc.  His  ability  and  experience,  as 
well  as  intelligence,  must  be  of  a  higher  order  than  that  of 
an  auditor.  He  may  be  a  member  of  one  or  more  Engineer- 
ing Societies,  or  a  member  of  the  bar,  with  no  accounting 
certificate  from  any  state.  Many  manufacturers,  following 
the  advice  of  their  bankers,  employ  mere  auditors  who  have 
the  title  "C.  P.  A.,"  expecting  them  to  render  the  service 
that  the  above-described  men  alone  are  qualified  to  give. 

If  in  need  of  a  superintendent,  a  shoe  manufacturer  will 
look  for  one  in  the  factory  of  a  successful  competitor,  and 
not  in  a  textile  mill.  He  should  search  for  accountants  and 
other  outside  advisers  in  the  same  way. 

Some  years  ago,  the  writer  was  called  in  consultation  by 
a  shoe  manufacturing  company.  The  books  had  just  been 
audited  by  a  concern  of  auditors  with  an  international 
reputation,  recommended  by  bankers.  The  directors  of 
the  company  said,  "This  report  tells  us  we  have  lost  $1,000 
a  month  for  the  last  year.  Can  you  tell  us  where  we  lost 
it  and  why  we  lost  it?  This  report  does  not  have  one  single 
intelligent  suggestion  in  it." 

It  was  not  a  very  difficult  problem  for  an  accountant 
who  understood  the  shoe  business  to  solve.  By  reading  the 
report  and  asking  a  few  questions,  the  fact  was  brought  out 
that  they  were  not  figuring  shoes  correctly.  They  adopted 
the  advice  then  given  and  have  made  money  ever  since. 


COMPREHENSIVE  ACCOUNTING  METHODS     91 

Previously,  bankers  told  them  how  to  operate  their  business, 
even  to  the  method  of  figuring  shoes. 

Ten  years  ago,  the  writer  was  before  a  bank  committee 
regarding  a  client  whose  balance  sheet  was  not  very  good. 
The  bank  was  not  disposed  to  extend  any  assistance  to  the 
concern,  although  in  the  same  city  with  the  manufacturer. 
The  writer  urged  the  bankers  to  grant  all  the  credit  possible 
and  aid  in  every  way  they  could,  but  they  would  not  assist, 
and  the  concern  had  a  hard  time  financing  for  years.  One 
year  ago  the  president  of  the  bank  wanted  to  know  why  I 
was  so  enthusiastic  for  my  client.  He  admitted  my  judg- 
ment had  been  correct,  but  added,  "You  must  admit  their 
balance  sheet  was  bad."  It  certainly  was,  but  the  banker 
judged  entirely  by  a  balance  sheet,  while  I  judged  after 
investigating  the  factory,  the  personnel  of  the  men  in  the 
organization,  and  the  plan  they  had  mapped  out.  To-day 
that  concern  can  borrow  a  million  if  it  so  desires. 

In  shoe  manufacturing  there  is  a  multitude  of  details  and 
problems  that  only  special  training  can  arrange  and  solve 
in  the  best  and  simplest  manner. 

The  second  classification  of  accountants  who  should  get 
a  certificate  from  the  state  are  Auditors. 

In  the  state  of  Massachusetts,  Savings  Banks  only  are 
required  to  employ  the  services  of  "Certified  Public  Ac- 
countants." 

Bank  bookkeeping  is  the  simplest  form  of  all  accounting. 
There  is  no  complication  to  it  equal  to  merchandise  ac- 
counting. 

Manufacturing  accounting  is  even  more  complicated 
than  merchandising,  because  in  addition  to  all  the  detail 
of  buying  and  selling,  it  has  the  vast  detail  required  in  the 
handling  of  raw  merchandise  and  of  the  labor  employed  in 
the  production  of  a  finished  article. 


92     COMPREHENSIVE  ACCOUNTING  METHODS 

Bankers,  by  training  and  instinct,  think  more  of  Assets 
and  Liabilities  than  they  do  of  Constructive  Accounting. 
Therefore,  a  "Destructive"  auditor  pleases  the  banker  better 
than  a  "Constructive"  accountant,  because  he  pulls  down 
all  assets  to  bedrock. 

There  are  several  good  reasons  for  employing  honest  and 
efficient  auditors. 

First:  Because  they  should  give  valuable  suggestions 
and  therefore  add  profits  to  a  business.  The  more  experi- 
enced they  are  in  an  industry,  the  better  their  advice  should 
be. 

Second:  Because  the  personnel  of  an  office  force  is  im- 
proved by  the  knowledge  that  an  outsider  is  coming  in  from 
time  to  time  to  look  over  the  work  and  compare  it  in  his 
mind  with  that  found  in  other  places.  Ambitious  employees 
will  constantly  improve  through  contact  with  a  man  who 
stimulates  them  to  be  the  best  in  their  class. 

Third:  Because  protective  systems  will  be  enforced  and 
thus  dishonesty  will  be  prevented.  To  illustrate,  the  writer 
installed  a  system  with  a  concern,  and  the  books  were 
audited  each  six  months.  The  same  owners  conducted  an- 
other small  business  in  the  same  office,  the  books  being  kept 
by  people  who  also  worked  on  the  books  mentioned  above. 
The  owners  said  the  second  business  was  so  small  that  no 
outside  accountant  was  required  on  the  books.  Something 
went  wrong  and  an  audit  was  made  which  disclosed  the  fact 
that  a  girl  who  worked  on  both  sets  of  books  had  stolen 
almost  four  thousand  dollars  from  the  unsystemized, 
unaudited  business,  and  not  a  dollar  from  the  systemized, 
audited  business.  One  thousand  dollars  spent  for  this  work 
would  have  insured  the  business  for  ten  years  at  a  saving  of 
three  thousand  dollars. 

Of  course,  inefficient  or  dishonest  audits  have  been  made 


COMPREHENSIVE  ACCOUNTING  METHODS     93 

where  stealing  was  not  disclosed,  but  an  honest,  efficient 
auditor  always  finds  a  shortage  if  one  exists.  Dishonesty 
in  bookkeepers,  cashiers  and  clerks  almost  always  is  caused 
by  the  loose  methods  of  an  employer  who  leaves  an  oppor- 
tunity open.  Generally  small  amounts  are  taken  at  first. 

No  man  has  a  moral  right  to  create  this  opportunity 
when  it  is  possible  to  prevent  it. 

Many  business  men  are  sick  and  do  not  know  it.  When 
they  find  it  out  they  seek  the  doctor.  Frequently  they  are 
too  late. 

After  the  above  loss  of  four  thousand  dollars  was  dis- 
covered the  owners  said,  "The  horse  has  been  stolen,  now 
we  will  lock  the  door."  They  realized  then  that "  an  ounce  of 
prevention  is  worth  a  pound  of  cure." 

Fourth:  Because  a  condition  of  confidence  and  good 
feeling  will  exist  between  the  debtor  and  his  creditors  who 
will  know  that  the  debtor  has  nothing  to  conceal. 

To  sum  up  the  value  of  Public  Accountants  to  shoe  manu- 
facturers it  may  be  said  that  the  regular  employees  in  most 
concerns  are  busy  with  the  detail  work  of  the  business,  and 
do  not  have  the  time  to  devote  to  unusual  problems.  Much 
time  is  required  to  think  and  work  out  new  or  improved 
ideas,  and  these  employees  should  welcome  the  outside 
adviser. 

These  public  men  are  clearing  houses  of  business  and 
office  knowledge,  and  should  have  more  diversified  informa- 
tion than  the  regular  employees.  If  the  man  is  an  intelligent 
instructor  and  ready  to  give  all  the  assistance  possible,  he  is 
a  very  valuable  man  to  employ.  He  is  constantly  in  com- 
munication with  bright  minds  and  continually  absorbing 
new  and  valuable  ideas. 


CHAPTER  10 

MACHINERY    INVENTORY   AND 
DEPRECIATION 

A  SHOE  manufacturer  has  four  standpoints  from 
which  to  view  machinery  values.  They  are  as 
follows : 

First:    Original  Cost  or  Money  Invested. 

Second:    Replacement  Value  in  Case  of  Fire. 

Third:    The  Value  to  a  Live,  Going  Business. 

Fourth:    Forced  Sale  Value. 

Some  manufacturers  take  pride  in  saying,  "My  machin- 
ery does  not  stand  on  my  books  at  a  cent;  all  charged  off." 
That  is  not  a  very  sensible  statement,  as  can  be  proved. 
It  shows  lack  of  knowledge  as  to  what  the  valuation  should 
be.  A  manufacturer  should  not  accept  the  point  of  view 
of  the  banker,  who  being  without  expert  knowledge  of  the 
value  of  equipment  appraises  it  at  the  price  of  old  junk. 
Next  to  the  factory  building,  machinery  is  the  most  im- 
portant asset  on  the  books.  To  manufacture  shoes  without 
it  is  an  impossibility.  It  should  not  be  ignored.  It  should 
be  treated  honestly  and  scientifically. 

To  illustrate  what  the  above  policy  of  charging  it  all  off 
may  do  to  the  manufacturer,  there  is  the  case  of  a  certain 
manufacturer  who  was  burned  out  completely.  He  re- 
built and  re-equipped  a  factory  and  started  to  figure  shoes 
on  a  basis  of  depreciating  his  new  plant  in  two  years.  The 

95 


96     COMPREHENSIVE  ACCOUNTING  METHODS 

result  was  that  his  shoes  cost  so  much  more  than  formerly 
that  he  was  unable  to  sell  to  his  old  trade.  Before  he  was 
really  aware  of  his  condition,  he  was  financially  embarrassed 
because  of  his  inability  to  get  established  again.  The  reason 
was  solely  this.  He  had  previously  had  his  machinery  all 
charged  off,  and  did  not  figure  into  his  product  anything  for 
depreciation.  Therefore,  he  gave  his  machinery  to  the 
people  who  bought  shoes  of  him,  and  when  he  had  to  start 
over  again  could  not  sell  his  shoes  to  the  same  old  trade 
because  he  had  to  get  more  money  in  order  to  pay  for  his 
plant.  Any  manufacturer  who  takes  the  above  view  is 
simply  giving  his  plant  to  the  purchaser  of  his  shoes. 

Many  manufacturers  have  been  to  the  expense  of  having 
appraisals  made  by  outside  appraisal  companies  in  order  to 
ascertain  what  their  investment  was  worth,  and  thus  get  an 
inventory  which  would  protect  them  in  case  of  fire.  I  have 
seen  many  of  these  inventories  a  year  or  more  after  taking, 
which  were  absolutely  useless  because  machinery  had  been 
moved  to  different  locations,  new  machinery  had  been  added 
and  old  machines  disposed  of,  but  no  record  made.  Changes 
in  methods  and  increase  in  production  had  necessitated  re- 
locating and  adding  to  the  equipment,  but  no  record  was 
made  on  the  inventory  of  such  changes,  the  system  becoming 
worthless  because  of  its  inelasticity.  The  result  was  that 
neither  ledger,  blue  print,  nor  inventory  told  the  situation. 
A  much  better  method  of  appraising  and  recording  is  here 
outlined.  It  is  something  that  should  be  a  part  of  every 
manufacturer's  system  and  should  be  carried  on  by  regular 
employees  rather  than  by  outside  people. 

We  will  take  as  an  example  a  five-story  factory.  Call 
the  bottom  floor  "A,"  the  second  floor  "B,"  the  third  floor 
"C,"  the  fourth  floor  "D,"  and  the  fifth  floor  "E."  Divide 
each  floor  into  convenient  sections,  designating  each  section 


1014.     Small,  Nichols  &  Co.,  Inc.,  Boston.     2283-1-30 


O 


O 


O 


MACHINERY    RECORD 


1  Rental  or 
Royalty 

I 

Rental  or 
Royalty 

£ 

2 

ROYALTY  OR  RENTAL 

SIZE  LENGTH  LABOR 
BELT  FEET  AT  PER  FOOT.  COST  INSTALLING 

SIZE  PULLEY 
PULLEY  COST  FREIGHT  DRAYAGE 

INSURED 
1  OWNER  LIABILITY  LIABILITY 

§ 

O 

X 

H 

2 
H 

P 

5 

w 

1 

LOCATION 

1 
§ 

i 

r 

I 

n 

I 

97 


98     COMPREHENSIVE  ACCOUNTING  METHODS 

by  numbering,  using  odd  numbers  on  one  side  of  the  building 
and  even  on  the  other.  Number  the  machines  consecu- 
tively, continuing  the  numbers  as  new  machines  are  intro- 
duced. 

A  drawing  should  be  made  of  each  floor,  showing  the 
numbered  sections.  Do  not  include  the  machines  in  the 
drawing  as  they  may  be  moved.  The  sections  will  remain 
permanent. 

A  loose-leaf  record  should  be  made  of  each  machine, 
describing  it  and  identifying  its  location,  together  with  its 
cost.  (See  Form  No.  1014.) 

If  it  should  become  necessary  to  rearrange  floor  A,  the 
loose  sheets  are  changed  accordingly. 

The  cost  of  pulley,  belt,  labor  of  installing,  freight, 
dray  age,  etc.,  should  appear  on  this  record.  The  record 
might  read  as  follows:  "Machine  No.  30,  Location  A  15," 
indicating  that  the  machine's  consecutive  number  is  30, 
and  its  location  is  in  section  15,  floor  A. 

A  complete  record  now  exists,  showing  the  amount  of  in- 
surance that  should  be  carried  on  each  machine  to  cover  the 
cost  of  its  replacement.  The  cost  of  a  machine,  plus  the 
installing  charges,  represents  the  investment  in  that  machine 
which  is  insurable.  This  record  should  be  carefully  pre- 
served and  kept  up-to-date  as  an  insurance  protection. 

There  is  a  space  on  the  record  for  the  estimated  life 
of  the  machine.  Perhaps  it  is  ten  years  at  its  maximum 
capacity.  If  so,  then  10%  of  the  original  cost  should  be 
depreciated  each  year.  The  only  scientific  basis  of  de- 
preciation of  machinery  is  upon  the  probable  or  estimated 
life  of  the  machine  at  its  maximum  capacity.  Whenever  a 
machine  has  become  so  worn  that  it  does  not  produce 
at  its  maximum  capacity,  it  is  a  losing  proposition. 

Another  sheet  should  be  made  in  connection  with  the 


COMPREHENSIVE  ACCOUNTING  METHODS     99 

machinery  record,  on  which  should  be  shown  the  original 
cost  of  the  machine,  its  depreciation  from  time  to  time  and 
the  present  worth.  This  sheet  is  made  in  the  form  of  a  trial 
balance,  and  the  totals  should  exactly  equal  the  accounting 
ledger  record.  The  amount  which  is  depreciated  should  be 
charged  to  the  operating  cost  and  credited  to  machinery 
depreciation. 

An  illustration  is  given  below  of  the  four  values  men- 
tioned in  the  first  part  of  this  chapter. 

The  original  cost  of  machinery  installed,  standing  as  a 
debit  on  the  accounting  ledger,  is  $100,000.  At  the  end  of 
five  years  the  depreciation  account  may  have  been  credited 
with  50%.  This  account  would  stand  $50,000.  The  net 
value  of  the  machinery  is  therefore  $50,000,  its  value  for  a 
going  business.  Replacement  value  in  case  of  fire  may  be 
$75,000  or  $80,000,  according  to  the  condition  of  the  ma- 
chines. All  new  machines  purchased  should  be  charged 
to  the  machinery  account.  Nothing  should  be  credited  to 
it  excepting  in  cases  where  machines  are  disposed  of,  in 
which  case,  the  full  amount  should  be  credited  and  the 
depreciation  account  debited  with  the  same.  Any  loss  or 
gain  that  may  have  taken  place  in  the  disposal  of  the  ma- 
chinery should  be  adjusted  so  as  to  leave  the  depreciation 
account  showing  the  exact  amount  of  depreciation. 

To  arrive  at  the  Forced  Sale  Value,  it  will  be  wise  to 
create  a  second  reserve  which  should  be  taken  out  of  profits 
and  surplus  earnings.  If  desired,  enough  can  be  set  aside 
to  wipe  out  the  machinery  entirely,  but  there  is  no  real 
good  reason  for  doing  this,  as  the  only  object  should  be  to 
reduce  these  assets  to  their  cash  valuation,  not  to  eliminate 
them  entirely. 


CHAPTER  11 
FORM  BOOK 

THE  stationery,  printed  matter  and  office  supplies 
should  be  kept  in  a  stock  room  and  issued  on  re- 
quisition, the  same  as  other  material  in  the  factory. 
It  may  be  kept  in  the  general  stock  room  or  separately. 
In  this  connection  a  Form  Book  should  be  kept  and  a  method 
of  handling  it  is  described  herewith. 

Either  a  loose-leaf  or  bound  book,  preferably  loose-leaf, 
may  be  used.  It  should  have  a  capacity  sufficient  to  last 
for  many  years. 

The  front  of  the  book  should  be  provided  with  an  alpha- 
betical index.  The  scheme  of  numbering  the  body  of  the 
book  should  be  by  the  use  of  keyed  numbers,  as  10,  20, 
30,  40,  etc.  These  numbers  should  be  placed  on  every 
other  page,  the  intervening  pages  being  blank.  We  now 
have  an  opportunity  for  placing  ten  forms  on  each  page. 
The  first  form  in  the  book  would  be  numbered  10,  the  second 
11,  and  the  third  one  12,  and  so  on,  indicating  that  they 
were  Forms  No.  1,  2  and  3  respectively  on  page  1  or  10. 

The  second  series  of  ten  forms  would  be  numbered 
20,  21,  22,  etc.  It  is  well  to  have  all  forms  bear  their  form 
number,  and  also  the  date  upon  which  they  were  ordered, 
as  well  as  the  quantity  ordered.  This  gives  an  opportunity 
to  know  easily  how  many  should  be  ordered  at  one  time,  and 
how  often  orders  should  be  placed.  Forms  should  also  be 

101 


•  .:  ' 


• 
•• 


102  COMPREHENSIVE  ACCOUNTING  METHODS 

named  if  possible,  and  this  name  should  be  printed  upon 
them.  They  can  then  be  listed  in  the  alphabetical  index 
in  the  front  of  the  book.  A  copy  of  each  form  should  be 
pasted  in  the  form  book,  indexed  and  priced.  It  is  also  well 
to  indicate  the  printer  from  whom  they  were  obtained. 

A  stock-room  record  should  be  kept  of  the  receipt  and 
disbursement  of  stationery  and  forms,  and  in  this  way 
much  waste  can  be  saved.  In  the  average  office  there  is  a 
tremendous  amount  of  waste  occasioned  by  over-buying 
and  careless  use.  There  is  always  a  tendency  to  over-buy 
printed  matter,  because  the  cost  of  large  amounts  is  very 
much  less  proportionately  than  for  small  amounts.  As  a 
general  rule  it  is  not  safe  to  buy  much  more  than  six  months' 
supply  at  once,  for  the  reason  that  changes  are  so  frequently 
made. 


Part  II 
Shoe  Manufacturing  Organization 


CHAPTER  12 
MANUFACTURING  PLANTS 

THE  first  step  in  building  a  shoe  manufacturing  or- 
ganization is  to  decide  upon  the  kind  of  shoes  to  be 
made,  how  they  shall  be  sold,  whether  to  the  jobbing 
or  retail  trade,  or  both,  and  how  large  a  product  shall  be 
produced.  The  next  step  is  to  build  an  organization,  choose 
a  location  and  acquire  or  build  a  factory.  It  may  not  be 
amiss  in  this  connection  to  consider  briefly  the  question  of 
the  factory  itself. 

In  planning  a  shoe  manufacturing  business,  it  is  well  to 
remember  that  specializing  is  continually  going  on,  and  that 
the  factories  which  enjoy  the  steadiest  run  of  business  and  are 
the  greatest  profit  producers  are  those  of  moderate  size,  —  say 
from  twenty-five  hundred  to  five  thousand  pairs  daily  capac- 
ity. 

In  1910  the  writer  made  the  assertion,  which  is  to-day 
conceded  by  the  best  known  engineers  in  the  country  to  be 
correct,  that  it  is  a  mistake  to  build  large  factories.  Large 
plants  are  not  easy  to  operate  economically  and  invariably 
produce  a  smaller  per  cent  of  profits  than  several  small  ones. 
The  small  manufacturer  who  operates  efficiently  has  nothing 
to  fear  from  the  large  concern.  The  fact  that  some  operators 
are  building  big  plants  should  not  alarm  any  one;  there  is 
danger  that  they  will  be  too  large  for  economy.  The  old 
idea  of  having  a  tremendous  plant,  employing  a  great  many 

105 


106     SHOE  MANUFACTURING  ORGANIZATION 

workmen,  and  producing  under  one  roof  all  kinds  of  shoes, 
from  a  man's  brogan  to  an  infant's  cack,  is,  at  the  present 
time  in  this  country,  almost  unknown. 

In  constructing  a  plant  for  economy  of  operation,  a 
three  or  five-story  building  is  usually  preferable  to  a  building 
having  four  stories.  The  material  used  in  construction 
may  depend,  to  some  extent,  upon  the  locality. 

The  fewer  styles  and  grades  produced,  the  easier  and 
more  economic  it  is  to  operate  a  plant,  and  concerns  organ- 
ized on  this  basis  are,  as  a  rule,  the  most  prosperous.  The 
location  that  is  chosen  for  a  plant  should  depend  largely  upon 
the  grade  of  shoes  to  be  made. 

After  the  product  has  been  decided  upon  and  standard- 
ized, a  decision  should  be  made  as  to  the  necessary  floor 
space  required  to  produce  the  output  estimated,  and  a  con- 
tinual fight  must  be  made  not  to  exceed  that  allowance. 
There  are  in  the  United  States  many  shoe  factories  so  poorly 
planned  that  the  users  might  destroy  them,  build  new,  and 
save  the  entire  cost  of  the  new  building  in  five  years'  time, 
perhaps  less.  The  greater  portion  of  the  shoe  factories 
in  this  country  were  not  constructed  by  scientific  men 
with  a  view  of  eliminating  waste,  and,  as  a  result,  there 
is  waste  floor  space,  waste  power  and  waste  time,  all  of 
which  means  loss  of  profits. 

Furthermore,  contending  against  poor  construction, 
manufacturers  cannot  take  advantage  of  all  the  possibilities 
of  reducing  manufacturing  costs.  The  whole  question  of 
expense  burden  must  be  considered,  if  economic  manufac- 
turing is  to  be  attained,  and  the  costs  of  production  are 
reflected  in  the  number  of  square  feet  of  floor  space  that  it 
takes  to  produce  each  pair  of  shoes  manufactured. 

The  writer  has  had  manufacturers  tell  him  that  they  had 
outgrown  their  present  factories  and  must  build  additions. 


SHOE  MANUFACTURING  ORGANIZATION     107 

Investigations  have  shown  that,  instead  of  making  shoes 
in  the  number  of  square  feet  it  should  require  for  that  kind 
of  product,  such  wasteful  conditions  existed  that  excessive 
floor  space  was  used,  and  the  factories  were  producing  far 
less  than  a  normal  volume  of  goods.  Think  of  the  waste 
going  on,  the  possibility  to  decrease  costs.  Think  of  the 
load  that  productive  labor  had  to  carry  because  of  the 
incompetence  of  management. 

The  most  speedy  production  and  consequent  reduction 
of  labor  cost  can  only  be  secured  in  a  properly  planned 
factory  building.  The  brightest  manufacturers  are  to-day 
realizing  more  and  more  the  difference  in  the  number  of 
pairs  of  shoes  that  can  be  produced  under  a  certain  burden 
of  expense  in  a  new,  scientifically-constructed  factory  as 
against  the  old  style  building. 

To  the  casual  observer  it  might  appear  that  a  factory 
in  one  of  the  older  centers  where  there  is  plenty  of  experienced 
help  might,  even  in  inadequate  buildings,  hold  its  own 
against  competition  in  a  modern  factory  where  the  help 
is  not  so  capable.  The  expert  investigator  who  inspects 
some  of  the  old  plants  with  several  annexes  and  nothing 
constructed  on  a  scientific  basis,  does  not  wonder  that  the 
modern  plant,  even  handicapped  by  the  lack  of  experienced 
labor,  can  more  than  compete  with  many  of  the  older  con- 
cerns. His  greatest  wonder  is  that  manufacturers  will 
undertake  to  make  shoes  in  old  traps  of  buildings  where 
there  is  poor  light  and  all  kinds  of  waste. 

As  an  evidence  of  the  lack  of  knowledge  of  factory  con- 
struction, even  to-day  manufacturers  having  modern  plants 
and  desiring  to  increase  their  floor  space,  frequently  destroy 
their  efficiency  by  building  on  additions  in  such  a  manner 
that  they  get  a  less  usable  increase  than  they  might  through 
some  other  method.  The  excuse  generally  offered  is  that 
of  cheap  construction. 


108     SHOE  MANUFACTURING  ORGANIZATION 

It  is  very  easy  to  save  money  in  building  and  lose  all 
that  is  saved  in  one  or  two  years  by  the  increased  cost  of 
feetage  per  pair,  which  means  cents  per  pair. 

Not  long  ago,  in  consulting  with  a  concern  regarding 
new  construction,  the  writer  had  occasion  to  demonstrate 
this  point  thoroughly.  Plans  for  an  addition  had  been  drawn 
by  an  architect.  While  versed  in  building  city  halls  and 
hotels,  this  man  had  no  comprehension  of  modern  shoe 
factory  requirements.  The  manufacturer  had  never  heard 
that  there  was  such  a  thing  as  an  architect  specializing  in 
shoe  factories,  but  he  readily  agreed  that  the  specialist  was 
the  man  who  should  be  consulted. 


CHAPTER  13 
PLAN  AND  CHART  OF  ORGANIZATION 

VIEWED  from  a  broad  standpoint,  any  manufac- 
turing business  is  divided  into  two  complete  and 
distinct  divisions:  Producing  and  Distributing. 
As  time  goes  on  and  manufacturing  plants  increase  in 
size  and  complexity,  the  battle  of  business  becomes  more 
and  more  difficult.  To-day  it  is  a  well-established  fact  that 
the  concerns  having  the  most  complete  and  perfect  organiza- 
tions are  the  ones  which  are  doing  the  most  successful 
business  and  producing  the  greatest  profits.  In  a  small 
business  it  may  not  seem  necessary  to  have  as  complete  an 
organization  as  in  a  large  business,  but  if  we  carefully  analyze 
conditions,  we  find  that  the  elements  of  the  large  organiza- 
tion must  necessarily  exist  in  the  small  one.  In  what  is 
sometimes  called  a  "one-man"  business  we  find  an  executive 
who  performs  the  functions  that  in  a  large  business  are  per- 
formed by  a  considerable  number  of  men,  but  in  order  to 
produce  results  which  are  satisfactory,  the  one  man  must 
have,  to  a  large  extent,  the  qualifications,  and  perform  the 
actual  work,  of  the  larger  number.  It  is  a  notorious  fact 
that  many  men  who  have  shown  great  ability  in  managing 
small  concerns  have  made  failures  in  undertaking  to  manage 
large  ones.  Such  failures  have,  to  a  great  extent,  been  due 
to  the  fact  that  the  men  were  not  good  organizers.  In 
other  words,  either  they  did  not  realize  the  necessity  of 

109 


110     SHOE  MANUFACTURING  ORGANIZATION 

gathering  about  themselves  men  qualified  to  perform  suc- 
cessfully work  which  they  had  previously  done  themselves 
or  else  they  had  not  the  ability  to  successfully  choose  such 
assistants. 

In  considering  the  subject  of  a  business  organization 
the  writer  will  not  confine  himself  either  to  a  small  business 
where  one  person  holds  several  executive  positions  or  to  a 
large  one  where  each  separate  department  has  a  head,  but 
will  endeavor  to  show  the  many  responsibilities  which  exist 
in  any  business. 

The  first  step  in  building  a  business  organization  is  to 
analyze  the  workings  of  such  an  organization  and  to  build 
a  chart  which  will  show  in  as  elaborate  form  as  is  necessary 
all  the  varying  responsibilities  which  must  exist. 

Herewith  will  be  found  a  chart  which  shows  in  general 
the  outline  of  a  working  organization  which  may  cover  a 
small  or  a  large  business.  It  will  be  understood  that  while 
this  chart  ostensibly  represents  the  working  organization  of 
a  corporation,  it  can,  nevertheless,  be  applied  to  a  co-partner- 
ship or  to  a  concern  owned  by  an  individual.  It  is  in  some 
ways  easier  to  plan  an  organization  for  a  corporation  than 
for  a  partnership  or  an  individual,  inasmuch  as  the  authority 
and  division  of  responsibility  are  defined  to  a  large  extent 
by  the  laws  of  the  states  under  which  corporations  are  formed 
and  by  their  by-laws. 

Whether  a  business  concern  is  a  corporation,  a  co- 
partnership or  an  individual,  it  is  a  great  advantage  to  have 
a  chart  showing  the  line  of  authority  and  responsibility,  as 
it  affords  a  well-defined  and  much  easier  working  organiza- 
tion .  If  the  reader  will  examine  the  chart,  on  following  pages, 
he  will  note  that  the  beginning  of  authority  and  responsibility 
is  with  the  stockholders,  the  real  owners  of  the  business. 
The  stockholders  (by  law  in  Massachusetts  and  some  other 


SHOE  MANUFACTURING  ORGANIZATION      113 

states)  elect,  among  other  officers,  a  Board  of  Directors 
and  a  Treasurer.  The  Treasurer,  being  the  guardian  of  the 
funds  of  the  concern,  is,  or  should  be,  directly  responsible 
to  the  stockholders  for  their  custody.  The  directors  elect, 
usually  from  their  number,  a  President,  and  if  the  business 
is  of  such  size  as  to  warrant  it,  they  will  elect  also  an  Execu- 
tive Committee  and  a  Finance  Committee.  Each  of  these 
committees  may  consist  of  one  or  several  persons.  The 
Finance  Committee  naturally  has  in  charge  the  financial 
operations  of  the  concern,  being  empowered  to  borrow 
money,  make  investments  and  direct  the  general  financial 
course  of  the  business,  although  it  must  be  remembered 
that  the  Treasurer  should  be  responsible  to  the  stockholders 
for  the  safe  keeping  of  all  the  funds. 

The  Executive  Committee  may  designate  one  of  its 
number,  or  elect  an  outsider,  as  the  General  Manager  of  the 
business.  It  is  preferable  that  the  General  Manager  should 
cover,  in  that  capacity,  the  operating  end  of  the  business, 
but  it  must  not  be  forgotten  that  the  supreme  management 
rests  with  the  Board  of  Directors,  to  whom  the  General 
Manager  is  responsible. 

It  will  be  noted  in  the  given  chart  that  the  operating  end 
of  the  business  is  divided  primarily  into  a  Manufacturing 
Division  and  a  Distributing  or  Selling  Division,  and  that 
each  of  these  divisions  is  subdivided  into  others.  In  a 
small  business  one  man  may  operate  both  the  Manufac- 
turing and  Selling  Divisions,  but  in  a  large  concern  this  is 
impractical,  inasmuch  as  one  man  cannot  manage  both  ends 
successfully. 

The  writer,  in  his  many  years  of  experience  as  an  effi- 
ciency engineer,  has  organized  many  businesses  and  made 
many  charts,  but  the  conditions  have  never  been  such 
as  to  warrant  his  making  two  alike. 


114     SHOE  MANUFACTURING  ORGANIZATION 

The  success  of  any  engineer  in  organizing  a  business 
depends  largely  upon  his  ability  to  put  the  right  men  into 
the  right  places.  The  human  element  with  all  its  limita- 
tions must  be  carefully  considered.  Few  shoe  manufac- 
turers have  as  yet  realized  the  importance  of  consulting 
engineers  trained  in  the  shoe  business,  but  the  time  is  coming 
when  shoe  manufacturing  engineers  will  be  recognized  as 
factors  in  the  shoe  industry,  as  are  mining,  consulting, 
electrical  and  other  engineers  in  their  fields. 

In  the  following  chapters  the  writer  will  consider  each 
sub-division  of  the  business  as  a  unit  by  itself,  but  the 
reader  is  cautioned  to  remember  that  while  all  the  sub- 
divisions are  thus  treated,  they  must  nevertheless  work  in 
conjunction  with  one  another,  and  that  the  responsibility 
of  each  is  finally  traced  back  to  the  Board  of  Directors 
and  to  the  Stockholders. 

The  reader  will  notice  by  consulting  the  chart  that  no 
special  provision  has  been  made  for  an  office  department, 
but  that  the  office  work  will  be  distributed  more  or  less 
through  all  of  the  departments.  The  greatest  amount  of 
office  work  will  be  done  in  the  departments  of  the  Treasurer 
and  Sales  Manager  and  in  portions  of  the  Manufacturing 
Division.  The  office  work  may  be  arranged  in  such  manner 
as  will  best  produce  the  results  desired,  but  the  detail  is 
not  taken  up  in  this  book  as  the  writer  is  discussing  the 
general  problem  of  manufacturing. 

In  considering  the  various  departments  into  which  a 
business  is  resolved,  the  financial  end  of  the  business  will  be 
considered  last,  although  it  is,  of  course,  of  primary  im- 
portance. The  other  portions  of  the  business  will  be  con- 
sidered, as  nearly  as  possible,  in  their  logical  order. 

The  first  step  in  the  actual  production  of  shoes  is,  of 
course,  to  design  them  and  to  create  sample  lines.  There- 


SHOE  MANUFACTURING  ORGANIZATION     115 

fore,  the  department  of  the  style  manager  will  be  considered 
first,  and  in  rotation  —  the  sales  department,  supplies  ^  | 
department,  production  department  with  its  sub-divisions 
of  maintenance,  labor,  planning,  quality  and  factories; 
paymaster's  department  and  cost  department.  By  treating 
the  subjects  in  this  manner,  we  trace  the  product  from  its 
inception  through  its  sale,  the  obtaining  of  materials  for  its 
construction,  the  provision  of  labor  and  mechanical  equip- 
ment, through  the  planning  of  the  factory  operation,  the 
maintenance  of  quality  and  actual  construction,  the  pay- 
ment for  the  labor,  the  records  of  cost,  and  finally,  considering 
the  financial  division,  through  the  receipts  and  profits  of  the 
business. 

It  will  be  noted  in  the  chart  that  all  of  the  manufacturing 
and  selling  is  done  under  the  direction  of  the  General 
Manager.  In  many  cases  the  sales  department  might  be 
conducted  under  the  direction  of  a  Sales  Manager  responsible 
directly  to  the  executive  committee  or  to  the  directors,  but 
for  simplicity's  sake,  in  this  instance,  it  is  considered  as  being 
under  the  direction  of  the  General  Manager  and  the  entire 
manufacturing  and  selling  is  considered  as  the  operating 
division. 

In  the  operating  division,  as  considered  above,  the 
departments  of  sales  and  production  are  of  the  most  im- 
portance. The  production  department  is  of  extreme  im- 
portance inasmuch  as  it  must  produce  all  profits.  To 
verify  this  statement  it  is  necessary  to  consider  what  profits 
actually  are.  A  true  profit  is  increased  wealth  and  in- 
creases in  wealth  can  only  be  made  by  combining  labor  and 
raw  material.  Some  men  will  contend  that  profits  are  pro- 
duced by  the  sales  department.  This  is  not  strictly  true. 
The  sales  department  merely  realizes  for  the  company  the 
values  which  have  been  created  by  the  production  depart- 


116     SHOE  MANUFACTURING  ORGANIZATION 

ment.  In  other  words,  profits  and  losses  are  the  difference 
between  what  anything  costs,  either  to  buy  or  to  produce, 
and  what  it  is  sold  for,  and  profits  do  not  actually  exist 
until  an  article  has  been  paid  for.  If,  for  example,  there 
were  two  concerns  manufacturing  shoes  of  identical  kinds, 
grades  and  qualities,  shoes  as  near  alike  in  appearance  and 
value  as  "peas  in  a  pod,"  with  one  concern  selling  them  at 
a  higher  price  than  the  other,  it  would  simply  mean  that 
the  selling  department  of  one  concern  was  able  to  realize 
to  a  greater  extent  than  the  selling  department  of  the  other, 
the  values  which  were  produced  in  manufacturing.  Hence, 
we  see  that  it  is  not  only  of  extreme  importance  to  manu- 
facture goods  economically,  but  it  is  of  equal  importance 
to  so  dispose  of  them  that  the  values  produced  are  returned 
in  dollars  and  cents.  The  expense  of  operating  a  sales 
department  is  a  burden  which  the  producers  must  collec- 
tively bear  to  obtain  a  market  for  the  result  of  their  labor. 

It  will  be  seen  that  while  it  is  the  work  of  the  selling 
department  to  realize  upon  the  values  produced,  never- 
theless the  workers  in  the  factory  are  the  direct  means  of 
producing  profits.  Here  we  have  the  first  great  division 
between  labor  which  is  Productive,  and  labor  which  is  Non- 
Productive. 

In  considering  the  distribution  of  the  product,  we  find 
that  between  the  time  it  leaves  the  producers  until  it  reaches 
the  ultimate  consumer  it  passes  through  a  greater  or  lesser 
number  of  organizations.  In  the  case  of  the  manufacturer 
disposing  of  his  product  through  his  own  retail  stores,  it 
passes  primarily  through  only  one  selling  organization,  that 
of  the  retail  store,  although  in  some  cases  the  manufacturer 
may  operate  one  or  more  jobbing  houses  of  his  own  which 
are  in  reality  selling  organizations.  In  the  case  of  the 
manufacturer  selling  to  the  retail  trade,  the  goods  must  pass 


SHOE  MANUFACTURING  ORGANIZATION     117 

through  at  least  two  selling  organizations;  that  of  the  manu- 
facturer and  that  of  the  retailer,  and  here  again  the  manu- 
facturer may  operate  a  selling  organization  in  the  shape  of  a 
jobbing  house.  In  the  case  of  the  manufacturer  selling  to 
the  jobbing  trade,  the  goods  pass  through  at  least  three 
selling  organizations;  that  of  the  manufacturer,  that  of 
the  jobber  and  that  of  the  retailer. 

Thus  we  see  that  the  value  created  by  the  workers  of  the 
factory  is  not  entirely  realized  until  the  product  has  reached 
the  consumer.  The  manufacturer  may  get  for  himself  the 
entire  profit  or  the  profit  may  be  divided  amongst  a  number 
of  selling  organizations  before  it  is  entirely  realized,  each 
selling  organization  assuming  its  share  of  the  responsibility 
and  expense  of  distribution. 


CHAPTER  14 

FUNCTIONS  OF  DEPARTMENTS 

STYLE  DEPARTMENT 

WHETHER  a  business  is  what  may  be  termed  a 
'* one-man"  business  in  which  the  owner  may 
act  as  his  own  Style  Manager,  or  whether  the 
business  is  large  enough  to  make  a  special  department  for 
the  origin  of  the  product,  some  means  must  be  provided  for 
the  inception  of  such  product  as  can  be  made  and  sold 
profitably. 

In  the  factory  producing  a  great  number  of  shoes,  the 
question  of  style  or  design  is  one  of  extreme  importance, 
inasmuch  as  the  operation  of  the  factory  depends  to  a  large 
extent  upon  the  kinds  of  shoes  produced. 

The  origin  of  styles  is  the  first  step  in  manufacturing, 
and  the  Style  Manager  must  necessarily  be  a  man  familiar 
with  both  the  selling  and  production  departments.  It  is 
his  work  to  design  lines  of  samples,  originate  new  styles, 
select  new  patterns,  lasts,  etc.,  specify  the  construction  of 
shoes  and  the  materials  to  be  used  in  them,  and  approve 
the  general  method  of  construction.  He  should  also  fix  the 
selling  prices. 

It  may  appear  to  some  people  that  the  Sales  Manager 
should  establish  the  selling  price  of  goods,  but  if  considera- 
tion of  this  matter  is  carried  to  the  final  analysis,  the  writer 
believes  it  will  be  plain  to  any  one  that  such  is  hardly  the 

119 


120     SHOE  MANUFACTURING  ORGANIZATION 

case.  It  is  primarily  the  province  of  the  selling  department 
to  market  the  goods  as  it  is  the  primary  province  of  the 
producing  division  to  manufacture  them.  It  is  the  province 
of  the  style  department  to  design  such  a  product  as  may  be 
produced  economically,  and  for  which  a  satisfactory  market 
may  be  found.  That  this  is  so,  is  exemplified  by  the  fact 
that  many  manufacturing  concerns  having  a  well-organized 
selling  department  nevertheless  require  that  all  new  styles 
be  approved  and  all  selling  prices  confirmed  by  a  person 
acting  in  the  capacity  of  General  Manager,  who,  while  not 
holding  the  title  of  Style  Manager,  nevertheless  acts  in  that 
capacity,  although  he  may  delegate  to  others  the  actual 
origin  of  styles  and  lines  of  samples. 

SALES  DEPARTMENT 

Inasmuch  as  this  book  is  written  primarily  for  the 
purpose  of  discussing  Production  and  Production  Costs, 
the  question  of  sales  will  be  considered  to  only  a  limited 
extent. 

When  the  product  has  been  properly  designed,  it  is  the 
work  of  the  sales  department  to  dispose  of  it.  This  depart- 
ment is  in  charge  of  a  person  usually  designated  as  a  Sales 
Manager.  It  is  his  duty  to  employ  and  direct  salesmen, 
assigning  territories. 

If  an  advertising  department  is  maintained,  it,  under 
an  Advertising  Manager,  should  become  a  part  of  the  sales 
department.  An  order  department  under  a  Chief  Order 
Clerk  would  also  be  included  in  this  department,  in  which 
should  be  conducted  the  handling  of  all  orders,  statistics  of 
sales  and  salesmen  and  correspondence  with  salesmen  and 
customers  prior  to  the  delivery  of  the  orders  to  the  produc- 
tion department.  The  sales  department  should  also  include 
the  shipping  department  and  the  department  for  stock  shoes, 


SHOE  MANUFACTURING  ORGANIZATION       121 

if  one  is  maintained.      The  department  of  credits  should 
preferably  be  under  the  direction  of  the  financial  division. 

STORE  DEPARTMENT 

The  next  logical  step  after  orders  have  been  received 
and  accepted  is  to  provide  materials  out  of  which  the  shoes 
are  to  be  constructed. 

While  for  years  in  the  shoe  manufacturing  business  it 
was  not  customary  to  maintain  a  store  department  which 
provided  all  materials  and  supplies,  the  heads  of  various 
departments  purchasing,  to  a  large  extent,  their  own  mate- 
rials, to-day  there  is  a  growing  tendency  to  concentrate  the 
purchases  under  the  direction  of  a  Purchasing  Agent. 

Shoe  manufacturing  has  become  so  complex,  and  the 
task  of  handling  labor  so  great,  that  the  heads  of  operating 
departments  should  not  be  taxed  with  any  work  other  than 
the  direction  of  their  own  departments.  Buying  is  a  work 
in  itself  which  requires  certain  qualifications,  and  these 
qualifications  are  not  usually  found  in  those  who  are  good 
factory  men. 

Broadly  considered,  the  Purchasing  Agent  should  provide 
all  materials  and  equipment  required  for  the  operation  of 
the  business.  He  should  have  control  of  all  receiving  de- 
partments and  act  as  the  custodian  of  all  store  rooms,  sup- 
plies and  equipment  until  requisitioned  by  the  production 
department. 

It  may  be  that  the  Purchasing  Agent  will  require  the 
assistance  of  others  who  are  specialists  in  the  buying  of 
certain  articles,  and  he  must  necessarily  keep  in  close  touch 
with  the  production  department  in  order  to  purchase 
intelligently  and  provide  materials  which  will  insure  an 
economic  and  satisfactory  product. 

When  materials  have  been  provided  they  should  be  kept 


122    SHOE  MANUFACTURING  ORGANIZATION 

in  suitable  store  rooms  and  be  issued  only  upon  written 
requisitions.  Requisitions  may  be  in  the  form  of  tags  or 
special  orders  for  certain  articles.  Records  of  disbursements 
should  be  kept  in  such  a  manner  that  cost  figures  are  readily 
obtained.  Figures  may  be  required  which  show  the  cost  of 
conducting  departments  as  a  whole,  or  sub-divisions  of 
departments,  and  in  some  cases,  of  individual  machines, 
depending  upon  conditions. 

Perpetual  inventories  should  be  carried,  showing  at  all 
times  the  amount  of  supplies  on  hand.  Records  may  well  be 
kept,  specifying  the  amount  of  each  class  of  material  ordi- 
narily kept  on  hand,  and  in  order  that  the  buying  may  be 
intelligently  done,  the  purchasing  agent  should  be  supplied  by 
the  production  department  with  data  as  to  its  future  wants. 

It  will  be  the  tendency  in  the  future  for  manufacturing 
concerns  to  produce  many  articles  which  they  at  present 
purchase  from  others.  All  such  articles  should  be  carried 
by  the  store  department  or  the  records  of  their  consumption 
be  handled  by  the  store  department. 

It  may  seem  to  many  that  the  maintenance  of  a  store 
department  is  an  unnecessary  expense,  but  experience  has 
proved  that  it  is  not  an  expense  in  the  sense  of  an  unprofit- 
able burden,  but  that  it  is  a  means  of  saving. 

Many  factories  are  cluttered  from  attic  to  cellar  with 
supplies  of  various  kinds,  and  tremendous  waste  necessarily 
occurs.  The  elimination  of  this  waste  will  mean  that  much 
less  burden  for  Productive  Labor  to  bear. 

PRODUCTION  DEPARTMENT 

We  have  now  traced  the  shoe  through  its  inception,  sale, 
receipt  of  orders,  the  purchase  of  materials  and  supplies, 
and  have  arrived  at  the  point  where  the  shoe  is  about  to  be 
made. 


SHOE  MANUFACTURING  ORGANIZATION    123 

The  actual  manufacturing  is  handled  by  the  Production 
Department,  which  contains  several  sub-divisions.  These 
sub-divisions  in  logical  order  are  —  maintenance,  labor, 
planning,  quality  and  factory. 

Maintenance 

In  order  to  operate  the  factory,  it  is  necessary  that 
buildings  be  kept  in  condition,  that  power,  light  and  heat 
be  furnished,  and  that  machinery  and  equipment  be  kept  in 
operating  condition. 

The  duty  of  caring  for  these  items  is  the  function  of  the 
maintenance  department.  It  is  much  better,  especially  in 
the  case  of  a  large  concern,  that  a  special  department  be 
organized  for  this  purpose,  inasmuch  as  there  are  many 
items  to  be  carefully  looked  after.  The  buildings  themselves 
must  be  kept  in  repair,  floors  kept  in  condition,  etc.  If 
power  in  the  shape  of  electric  current  is  purchased,  the 
problem  of  its  distribution  and  utilization  is  reduced  to  a 
minimum.  If  a  power  plant  is  operated,  this  item  is  of  great 
importance,  as  frequent  shutdowns  mean  loss  of  production. 
The  plant  must  be  adequately  lighted,  else  production  falls 
off.  The  factory  should  be  kept  at  the  proper  working 
temperature,  neither  too  hot  nor  too  cold.  The  question 
of  caring  for  machinery  has  been  much  discussed.  Some 
superintendents  believe  that  the  care  of  machinery  should 
be  left  to  the  foreman  of  each  department,  maintaining  that 
the  machinery  will  be  better  cared  for.  This  can  hardly 
be  so.  If  one  will  study  carefully  the  condition  in  a  factory 
where  machinery  is  cared  for  under  the  direction  of  in- 
dividual foremen,  and  especially  where  operators  are  per- 
mitted to  repair  and  adjust  machines,  he  will  find  that  the 
mechanical  equipment  as  a  whole  in  ninety-nine  cases  out 
of  one  hundred  is  below  par.  In  other  words,  the  operator 


124     SHOE  MANUFACTURING  ORGANIZATION 

will  not  spend  the  time  to  see  that  his  machine  is  kept  clean, 
that  all  screws  and  bolts  are  tight,  and  that  the  machine  is 
properly  adjusted.  If  the  machinery  is  not  in  such  condi- 
tion that  it  can  be  run  at  its  maximum  speed  and  do  perfect 
work,  lessened  and  imperfect  production  is  sure  to  result. 
Again,  if  machinery  is  not  kept  in  the  best  possible  condition, 
it  is  continually  getting  out  of  repair  or  adjustment,  which 
means  further  loss  of  production. 

In  Chapter  13  the  statement  is  made  that  all  profits  arise 
from  Production.  Hence,  it  is  easy  to  understand  how 
essential  it  is  that  the  volume  of  production  be  kept  at  a 
maximum.  Whatever  is  true  of  keeping  machinery  in  first- 
class  running  order  is  equally  true  of  all  other  forms  of 
equipment,  whether  fixed  or  movable,  and  the  writer  cannot 
impress  too  forcefully  upon  the  reader  the  vital  necessity  of 
keeping  the  volume  of  production  at  its  maximum  if  the  full 
return  in  profits  is  to  be  expected. 

Labor  Department 

Shoes  cannot  be  manufactured  without  labor.  Inas- 
much as  profits  are  made  by  combining  raw  material  and 
labor,  it  is  essential  that  the  labor  employed  be  of  the  highest 
obtainable  class. 

Many  arguments  have  been  advanced  to  show  that 
better  results  are  obtained  when  each  foreman  hires  his  own 
help.  In  spite  of  these  arguments,  actual  practice  has  shown 
that  such  is  not  the  case.  The  proper  selection  of  labor 
requires  certain  qualifications  which  are  generally  lacking 
in  men  who  otherwise  make  first-class  heads  of  departments. 
Broadly  speaking,  the  labor  in  a  factory  is  purchased  just 
the  same  as  material  and  equipment  is  purchased.  It  should 
not  be  necessary  for  a  foreman  to  spend  his  valuable  time  in 
hiring  men.  He  should  be  held  responsible  for  the  conduct 


SHOE  MANUFACTURING  ORGANIZATION    125 

of  his  department  so  far  as  the  product  is  concerned,  but 
he  should  be  provided  with  every  facility,  so  that  his 
entire  time  and  attention  can  be  devoted  to  the  manufac- 
ture of  shoes.  The  price  that  is  paid  for  labor  is,  in  al- 
together too  many  instances,  the  result  of  bargaining  be- 
tween the  foreman  and  the  workmen  and  is  seldom  in  the 
shoe  business  based  upon  the  actual  value  of  the  work 
performed.  The  only  just  and  accurate  way  to  ascertain 
the  value  of  certain  operations  is  by  means  of  carefully 
made  time  studies.  The  average  operator  does  not  perform 
his  work  with  the  minimum  expenditure  of  time  and  exer- 
tion. There  is  one  best  method  of  performing  an  operation, 
and  it  should  be  the  work  of  the  labor  department  to  de- 
termine the  best  method  of  performing  operations  and  the 
amount  of  time  required  for  so  doing.  In  this  manner  all 
the  different  operations  necessary  to  the  construction  of  a 
shoe  can  be  put  upon  an  equality  basis.  A  workman  should 
have  the  same  earning  capacity  operating  on  a  difficult 
shoe  that  he  has  when  working  upon  an  easy  shoe.  When 
prices  are  not  so  fixed,  we  find  a  condition  where  an  operator 
can  earn  at  a  much  higher  rate  when  working  on  some  shoes 
than  on  others.  The  result  is  invariably  dissatisfaction  and 
the  demand  for  increased  prices  on  certain  shoes.  The 
writer  is  not  endeavoring  to  defend  either  a  high  or  low  rate 
of  wages,  but  believes  that  both  the  employer  and  employee 
are  entitled  to  fair  treatment. 

With  a  labor  department  operated  properly,  factory 
conditions  are  bound  to  be  better  and  more  harmonious. 
There  is  less  liability  of  unfair  treatment  upon  the  part  of 
foremen,  and  in  case  there  is  surplus  help  in  one  department, 
it  can  frequently  be  transferred  to  another  department 
which  may  be  short  of  help. 

The  labor  department  in  addition  to  employing  and  dis- 


126     SHOE  MANUFACTURING  ORGANIZATION 

charging  men,  making  time  studies  and  determining  prices, 
should  keep  such  records  of  employees  as  will  show  who  are 
the  most  valuable  and  who  should  be  discharged  first  in  case 
discharges  become  necessary.  Favoritism  on  the  part  of 
foremen  should  be  strictly  prohibited,  and  all  employees 
should  be  treated  exactly  alike. 

The  labor  department  should  have  control  of  factory 
entrances,  watchmen,  etc.,  and  should  have  all  dealings 
with  labor  unions. 

Planning  Department 

Of  all  the  divisions  of  the  Production  Department,  that 
devoted  to  planning  is  of  the  greatest  importance,  for  upon 
it  depends  the  smooth,  steady  and  economic  operation  of  the 
factory. 

The  planning  department  as  considered  in  this  book  is 
that  portion  of  the  organization  which  takes  the  materials 
furnished  by  the  store  department  and  manufactures  shoes 
to  fill  the  orders  taken  by  the  sales  department.  It  must 
first  of  all,  upon  the  receipt  of  orders  from  the  sales  depart- 
ment, make  whatever  analysis  of  them  is  required,  assign 
delivery  dates  and  furnish  the  purchasing  agent  with  data 
covering  requirements.  It  should  then  write  the  factory 
tags  and  select  the  work  to  be  put  into  the  factory  each  day. 
It  should  make  the  factory  sheets,  direct  the  operation  of 
the  sheet  system  in  the  factory,  follow  the  progress  of  shoes 
through  the  works  and  make  reports  of  production.  It  also 
devolves  upon  this  department  to  devise  methods  of  operat- 
ing, initiating  easier  and  quicker  and  more  economic  ways 
of  making  shoes.  It  might  in  short  be  called  a  "ways  and 
means  "  department.  If  the  entire  control  of  labor  is  vested 
in  the  labor  department  as  outlined  in  this  book,  then  the 
planning  department  should  call  upon  the  labor  department 


SHOE  MANUFACTURING  ORGANIZATION    127 

to  make  whatever  time  studies  are  necessary  in  determining 
upon  the  merits  of  changes  in  method.  In  some  organiza- 
tions it  would  be  better  to  have  the  time  studies  made  by 
the  planning  department,  rather  than  by  the  labor  depart- 
ment. 

The  most  important  work  which  this  department  has  to 
perform  is  that  of  operating  the  production  system,  which 
is  sometimes  called  the  "sheet"  system.  The  importance 
of  the  production  system  is  so  great  that  the  writer  has 
devoted  a  special  chapter  to  its  consideration.  (See 
Chapter  15.) 

Quality  Department 

The  quality  department  is  second  in  importance  only 
to  the  planning  department.  Many  would  consider  it  of 
greater  importance  than  the  planning  department.  How- 
ever, if  the  planning  department  is  not  properly  conducted, 
the  quality  department  will  find  it  impossible  to  get  the 
results  expected  of  it,  and  in  any  event,  quality  depends  to  a 
large  extent  upon  the  precision  with  which  predetermined 
methods  of  manufacturing  are  carried  out. 

In  times  past  quality  of  shoe  making  depended  upon  the 
skill  of  individual  employees,  but  modern  factory  methods 
have  necessitated  a  departure  from  a  dependence  solely 
upon  the  ability  of  individual  workmen  and  require  that 
shoes  be  manufactured  in  accordance  with  well-defined  plans. 

The  quality  department  should  have  charge  of  all  in- 
spection work,  and  it  is  its  special  duty  to  see  that  the 
quality  of  product  is  maintained. 

It  is  needless  to  say  that  the  planning  and  quality  de- 
partments must  be  in  close  touch  with  and  work  in  con- 
junction with  each  other,  as  together  they  direct  the  opera- 
tion of  the  factory. 


128     SHOE  MANUFACTURING  ORGANIZATION 

Factory  Department 

The  factory  or  factories,  if  there  be  more  than  one, 
should  be  operated  under  the  supervision  of  local  factory 
managers,  who  should  have,  under  the  direction  of  the 
production  and  quality  managers,  charge  of  actual  factory 
operations.  Under  them  also  will  come  the  foremen  or 
heads  of  departments  and  through  them  will  follow  the 
control  of  labor. 

Upon  the  successful  operation  of  the  factories  depend 
both  the  quality  and  quantity  of  output,  and  upon  these 
two  features  depends  the  profit  of  the  business. 

It  may  seem  that  in  the  outline  of  the  organization 
which  has  preceded  the  greater  part  of  the  work  usually 
performed  by  the  factory  manager  has  been  taken  away  from 
him,  and  it  is  true.  In  a  factory  of  any  size  any  superin- 
tendent will  find  his  efforts  taxed  to  the  utmost  if  he  is 
to  properly  operate  his  plant.  If  he  is  to  further  have  his 
energy  taxed  with  the  designing  of  shoes,  the  purchase  of 
materials  and  equipment,  the  upkeep  of  the  factory  building 
and  equipment,  the  hiring  of  help,  and  the  planning  of  factory 
operation,  some  portion  of  the  work  under  his  supervision 
is  bound  to  suffer.  In  the  organization  as  outlined,  an 
attempt  has  been  made  to  arrange  everything  for  his  con- 
venience and  make  it  as  easy  as  possible  for  him  to  fulfill 
the  exacting  duties  which  will  be  required  of  him. 

If  the  factory  sanitary  and  elevator  services  are  not 
cared  for  by  the  maintenance  department,  they  will  fall 
under  the  care  of  the  local  factory  manager. 

PAYMASTER'S  DEPARTMENT 

The  Paymaster's  Department  deals  with  the  remunera- 
tion of  the  factory  workers.  It  may  or  may  not  care  for  the 
labor  of  the  clerical  forces.  It  should  control  time  clocks 


SHOE  MANUFACTURING  ORGANIZATION     129 

and  labor  checking,  compile  the  payroll,  obtain  the  money  for 
the  payroll  from  the  cashier,  place  it  in  the  pay  envelopes 
and  distribute  the  pay  envelopes  among  the  employees. 
In  some  factory  organizations  the  paymaster  is  not  under 
the  jurisdiction  of  the  operating  division,  but  the  writer 
believes  that  preferably  he  should  be  under  such  jurisdiction. 

COST  DEPARTMENT 

It  is  the  province  of  the  Cost  Department  to  oversee 
all  cost  work,  to  make  all  estimates  of  cost  and  conse- 
quently all  allowances.  It  should  also  compile  statistics 
of  the  consumption  of  materials,  the  cost  of  labor  and  all 
expenses,  and  make  condensed  cost  or  operating  statements. 

It  cannot  be  stated  too  often  that  shoe  manufacturing 
as  conducted  to-day  is  in  reality  a  contracting  business,  the 
factory  agreeing  to  furnish  the  selling  division  with  shoes 
at  certain  prices  and  following  certain  specifications.  Conse- 
quently, it  is  necessary  to  employ  an  accurate  basis  for  esti- 
mating the  cost  of  shoes  which  are  to  be  produced.  A  great 
many  methods  are  employed  in  estimating  the  cost  of  shoes, 
and  there  are  few  manufacturers  who  know  the  exact  cost 
of  each  style  or  kind  of  shoe  which  they  manufacture  and 
the  greater  the  variety  of  construction,  styles,  grades,  etc., 
the  less  accurate  their  figures  are  apt  to  be. 

There  is  a  large  class  of  manufacturers  who  always 
endeavor  to  "figure  safe,"  and  there  is  also  a  large  class  of 
manufacturers  who,  because  of  conditions  in  their  selling 
department,  figure  extremely  low.  The  result  has  been  bad 
for  both  classes  in  many  cases.  The  first  class  has  often 
figured  itself  out  of  business,  being  apparently  unable  to 
meet  competition,  and  the  second  class  has,  in  many  cases, 
become  insolvent,  being  unable  to  produce  shoes  at  the 
estimated  cost. 


130  SHOE  MANUFACTURING  ORGANIZATION 

The  greatest  deficiency  usually  found  in  the  work  of 
estimating  shoe  costs  is  entire  lack  of  knowledge  of  how 
to  figure  correctly  the  burden  of  expense.  It  is  comparatively 
easy  to  figure  material  cost  and  labor  cost. 

There  are,  among  many  others,  two  common  methods  of 
estimating  the  cost  of  overhead  expense  as  applied  to  various 
shoes.  One  is  by  using  a  per  cent  of  the  selling  price  and  the 
other  is  to  use  an  estimate  of  so  much  per  pair.  Neither  of 
these  methods  is  correct.  Using  the  first  method  and  taking 
as  an  example  a  shoe  selling  at  $4.00  per  pair,  with  an  ex- 
pense estimated  at  10%  of  the  selling  price,  in  case  the  ma- 
terial cost  of  this  shoe  was  increased  so  that  it  would  have 
to  be  sold  at  $4.25,  the  expense  burden  would  be  theoret- 
ically increased  two  and  one-half  cents  per  pair.  It  is  easy 
to  see  that  the  expense  burden  would  not  have  increased  any 
such  amount.  The  writer  has  seen  many  instances  where 
this  method  was  used  where  cost  estimates  were  erroneous 
to  the  extent  of  10  or  15  cents  per  pair.  If  the  method  of 
using  a  flat  rate  per  pair  were  employed,  and  a  kind  of  shoe 
were  introduced  which  necessitated  an  increased  labor  cost 
and  a  much  slower  process  of  manufacturing,  the  burden 
of  expense  allowed  would  be  entirely  wrong.  Many  manu- 
facturers changing  from  one  kind  of  shoes  to  another  have 
seriously  impaired  their  profits  by  figuring  expense  by  this 
method. 

It  is  therefore  necessary  to  find  a  base  which  is  more 
reliable  and  the  base  which  is  generally  accepted  to-day  is 
productive  labor  cost.  If  shoes  are  more  or  less  difficult  to 
manufacture,  if  they  require  a  longer  period  of  time  in  the 
processing,  or  if  they  require  more  or  less  machinery  and 
equipment,  these  facts  are  reflected  in  an  increased  or  de- 
creased cost  of  productive  labor.  On  the  assumption  that 
labor  is  paid  on  an  exact  basis  of  the  value  of  the  work 


SHOE  MANUFACTURING  ORGANIZATION   131 

which  is  performed,  labor  cost  would  be  a  very  accurate 
basis  upon  which  to  pro-rate  expenses.  It  is  true  in  the 
shoe  manufacturing  industry  that  labor  is  not  always  paid 
on  the  basis  of  what  it  performs,  but  there  is  no  basis  of 
pro-rating  expense  that  is  more  accurate.  In  other  words, 
for  every  dollar  expended  in  labor,  there  is  a  certain  amount 
of  money  expended  for  expenses. 

The  detail  of  figuring  the  cost  of  material  and  labor  is 
not  at  all  difficult  to  carry  out.  The  manner  in  which 
this  detail  should  be  carried  out  depends  very  largely  upon 
the  conditions  which  exist  in  any  given  plant.  The  method 
to  be  used  in  estimating  the  cost  of  shoes  is  very  fully 
gone  into  in  the  first  chapters  of  this  book,  where  the  reader 
will  find  very  simple  and  easily  operated  methods,  and, 
moreover,  methods  which  are  practical  and  which  yield 
good  results. 

It  is  needless  to  say  that  any  person  installing  a  cost 
system  in  a  shoe  factory  must,  if  adequate  results  are  hoped 
for,  be  a  person  who  is  familiar  with  the  shoe  manufacturing 
business.  A  great  many  systems  have  been  installed  which 
have  proved  unsatisfactory,  due  largely  to  the  fact  that  the 
person  making  the  installation  was  not  familiar  with  the 
problems  that  existed  in  the  manufacture  of  shoes.  The 
theory  of  cost  accounting  is,  of  course,  the  same  in  all  in- 
dustries. It  is  the  specific  details  existing  in  the  individual 
industry  which  require  a  man  of  experience  in  that  particular 
industry. 

It  is  safe  to  say  that  no  other  manufacturing  industry 
presents  so  many  complications  as  that  of  shoe  manufac- 
turing, and  this  fact  is  largely  responsible  for  the  non-suc- 
cess of  many  shoe  factory  cost  systems.  It  is  true  that 
many  shoe  manufacturers  have  been  very  successful,  even 
though  they  had  practically  no  cost  systems  at  all,  relying 


132     SHOE  MANUFACTURING  ORGANIZATION 

upon  the  ability  of  the  selling  end  of  the  business  to  get 
high  prices  for  their  product.  The  time  is  coming,  however, 
when  this  is  going  to  be  more  and  more  difficult,  and  many 
of  the  larger  concerns  have  begun  to  realize  that  they  must 
be  closer  in  touch  with  the  actual  cost  of  producing  in  order 
to  maintain  their  position  in  the  manufacturing  field.  A 
man  who  is  capable  of  installing  an  accurate  cost  system 
is  a  man  of  great  value,  and  as  stated  before,  he  should  be  a 
man  who  is  intimately  acquainted  with  the  problem  of 
manufacturing  shoes. 

In  addition  to  the  work  of  making  estimates  of  cost,  it 
should  devolve  upon  the  cost  department  to  compile  statis- 
tics showing  the  consumption  of  material,  and  the  cost  of 
labor  and  overhead  expense.  It  should  also  furnish  reports 
of  production,  and  by  combining  these  four,  furnish  a  con- 
densed cost  or  operating  statement,  as  shown  in  Chapter  7. 

It  is  not  to  be  assumed  that  a  manufacturing  concern 
will  make  profits  simply  because  it  operates  an  adequate 
cost  department,  but  that  the  cost  department  will  furnish 
statistics  showing  whether  or  not  the  business  is  being  con- 
ducted at  a  profit,  so  that  a  policy  may  be  adopted  which 
will  insure  the  greatest  amount  of  profit  possible. 

TREASURER 

In  Massachusetts  and  some  other  states  laws  provide 
that  the  treasurer  of  a  corporation  shall  be  elected  by  the 
stockholders,  and  the  by-laws  of  any  corporation  may  make 
such  provision  if  desired. 

One  of  the  evils  of  the  present-day  corporation  practice 
is  that  many  treasurers  are  elected  by  directors,  the  result 
invariably  being  that  the  presidents  of  concerns  have  ab- 
solute control  not  only  of  the  operating  end  of  the  businesses, 
but  also  of  the  finances.  That  this  is  not  a  policy  which 


SHOE  MANUFACTURING  ORGANIZATION 


makes  for  the  greatest  protection  of  the  stockholders  is 
evidenced  by  many  recent  happenings. 

The  treasurer  of  a  corporation  having  in  his  charge  all 
the  funds  of  the  corporation,  should  not  be  subservient  to 
any  man  or  group  of  men  other  than  the  stockholders  who 
own  the  corporation.  He  should  be  entirely  free  from  any 
pressure  which  may  be  brought  upon  him  through  officers 
of  the  corporation  who  may  have  schemes  for  their  own 
aggrandizement  at  the  expense  of  stockholders. 

The  treasurer  should  sign  all  notes  and  contracts,  ex- 
cept those  of  the  purchasing  agent.  He  should  sign  all 
checks  after  approval  by  the  comptroller,  control  the  ac- 
counting and  have  control  of  credits  and  collections.  Under 
him  should  be  a  cashier,  a  bookkeeper  and  a  credit  manager. 
The  cashier  should  have  control  of  all  cash,  see  that  dis- 
counts are  taken,  write  all  checks,  and  make  a  daily  financial 
statement  for  the  treasurer.  The  bookkeeper  should  have 
charge  of  all  books  of  account  and  compile  periodic  statements 
of  assets  and  liabilities.  Upon  the  credit  manager  devolves  the 
work  of  getting  information  regarding  customers,  the  grant- 
ing of  all  credits  and  the  making  of  all  collections.  With 
an  outline  such  as  this,  the  treasurer  is  in  complete  charge 
of  all  the  funds  of  which  the  corporation  is  possessed. 

COMPTROLLER 

Like  the  treasurer  the  comptroller  should  be  responsible 
solely  to  the  stockholders,  and  should  be  elected  by  them. 

It  is  the  prime  duty  of  the  comptroller  to  see  that  the 
funds  of  a  concern  are  not  misspent.  He  should  plan  the 
accounting  and  other  office  systems,  approve  all  payments 
before  checks  are  signed  by  the  treasurer,  and  furnish  to 
the  stockholders  and  directors  periodic  reports  of  the  condi- 
tion of  the  concern  and  of  the  business  in  general. 


CHAPTER  15 

PRODUCTION  SYSTEM 

(Sometimes  called  "Sheet  System") 

THE  advantages  of  operating  a  shoe  factory  under  a 
well-planned  Production  System  are  so  great  that 
it  is  a  matter  of  wonderment  that  more  factories 
are  not  so  conducted. 

Aside  from  the  economic  use  of  material,  there  is  no 
profit  producer  its  equal.  The  chief  advantages  lie  in  the 
uniform  volume  of  production  and  the  resulting  effect  in 
the  reduction  of  the  cost  of  overhead  expense,  in  the  in- 
creased earnings  of  labor,  and  in  the  more  perfect  perform- 
ance of  labor  operations.  Neglecting  such  advantages  as 
the  ability  to  foretell  exact  dates  of  shipment  and  the  ability 
to  complete  orders  in  accordance  with  agreed  terms  of  sale, 
the  previously  cited  advantages  more  than  compensate  for 
any  expenditure  of  time  or  money  necessary  for  its  successful 
operation. 

Some  people  look  upon  the  Production  System  merely 
as  a  means  of  enabling  them  to  predict  shipping  dates  and 
to  insure  the  shipment  of  goods  when  promised.  These 
are  indeed  valuable  features,  but  when  the  Production 
System  is  looked  upon  from  a  broad  standpoint,  it  should 
be  considered  rather  as  a  valuable  assistant  in  the  making 
of  profits  than  as  anything  else. 

In  order  to  receive  the  greatest  value  from  a  Production 

135 


136      SHOE  MANUFACTURING  ORGANIZATION 

System,  the  plan  must  be  arranged  in  such  manner  that  the 
highest  efficiency  will  exist.  It  requires  first  of  all  that 
equipment  be  properly  located  to  insure  rapid  and  smooth 
passage  of  goods  in  process.  Unless  equipment  is  so  located, 
more  or  less  trouble  will  be  encountered. 

In  order  to  use  the  equipment  to  the  best  advantage, 
orders  must  be  analyzed  when  received.  This  analysis 
must  be  made  in  such  a  way  as  to  show  the  burden  about  to 
be  placed  upon  each  kind  of  equipment  during  the  days  and 
weeks  which  follow,  and  show  as  well  the  necessity,  if  one 
exists,  of  acquiring  additional  equipment. 

If  no  office  records  of  orders  ahead  of  the  works  are  kept, 
it  will  be  impossible  to  intelligently  promise  goods  and  lay 
out  work  for  the  factory  in  such  a  manner  as  to  insure 
either  the  fulfillment  of  promises  or  the  smooth  operation 
of  the  plant. 

If  a  Production  System  is  operated  in  such  manner  as 
to  obtain  high  efficiency,  it  will  be  found  of  great  advantage 
in  keeping  the  amounts  of  raw  material  on  hand  and  shoes 
in  process  at  a  minimum.  In  a  factory  properly  operated, 
it  is  no  unusual  thing  to  find  from  one-third  to  one-half 
less  investment  in  materials  and  goods  in  process  than  in  the 
factory  not  so  operated .  The  saving  in  interest  charges  by  re- 
ducing the  amount  of  active  capital  employed  will  more  than 
pay  for  the  cost  of  operation,  or  with  the  same  investment 
of  capital,  many  more  shoes  and  greater  earnings  will  result. 

The  effect  upon  labor  is  beneficial,  inasmuch  as  workmen 
are  insured  a  full  day's  work  each  day,  which  in  turn  means 
a  full  pay  envelope  at  the  end  of  each  week.  The  workman 
is  operating  under  better  conditions.  The  work  comes  to 
him  in  better  shape  and  he  can  do  it  faster  and  more  per- 
fectly. Some  may  question  the  truth  of  this  assertion,  but 
it  is  nevertheless  a  proven  fact  that  such  is  the  case. 


SHOE  MANUFACTURING  ORGANIZATION     137 

The  effect  upon  the  trade  is  so  well  known  that  it  needs  little 
consideration.  Jobbers  and  retailers  always  give  a  preference 
to  producers  who  can  deliver  goods  when  they  are  wanted, 
or  at  least  when  they  are  promised.  As  a  selling  feature, 
a  well-organized  Production  System  is  a  tremendous  factor. 

If  the  advantages  of  a  well-planned  and  operated  Pro- 
duction System  were  sufficiently  understood  by  manufac- 
turers in  general,  the  present  day  would  see  no  shoe  factory 
conducted  without  one. 

The  general  plan  of  operation  of  a  Production  System  is 
always  the  same.  The  actual  detail  varies  considerably 
with  individual  conditions. 

The  factory  making  shoes  for  the  jobbing  trade  is  a 
somewhat  easier  proposition  to  operate  than  a  factory 
making  shoes  for  the  retail  trade.  The  lots  of  shoes  usually 
contain  a  larger  number  of  pairs  and  are  more  uniform  in 
size.  Delivery  dates  also  offer  less  complications. 

In  general,  a  Production  System  consists  of  putting  into 
the  works  each  day  approximately  a  given  number  of  pairs 
of  shoes  so  selected  that  they  will  pass  through  the  works 
without  meeting  unusual  obstacles  and  delays.  Serious 
complications  sometimes  arise  which  would  seemingly 
prevent  the  carrying  out  of  this  idea.  Ordinarily  work  is 
sent  to  the  cutting  room  once  a  day,  or  as  commonly  ex- 
pressed, one  sheet  a  day  is  entered.  This  method  is  usually 
quite  satisfactory,  except  when  there  are  Saturday  half 
holidays.  When  such  exist,  and  six  equal  sheets  are  en- 
tered each  week,  then  it  becomes  necessary  for  factory  de- 
partments to  gain  one  hour  each  day  for  the  first  five  days 
of  the  week  in  order  that  the  sixth  sheet  may  be  completed 
by  Saturday  noon.  Either  this  is  necessary  or  a  half  sheet 
must  be  entered  for  Saturday.  The  objection  to  this  method 
is  that  this  half  sheet  may  leave  one  department  on  Saturday 


138     SHOE  MANUFACTURING  ORGANIZATION 

with  perfect  satisfaction,  but  it  passes  through  other  de- 
partments on  other  days  of  the  week,  and  frequently  causes 
more  or  less  trouble. 

The  best  plan  of  operation  is  to  use  two  sheets  each  day, 
or  twelve  sheets  per  week,  using  eleven  sheets  per  week  if 
Saturday  half  holidays  exist.  It  is  a  little  more  work  to 
make  two  sheets  per  day  instead  of  one,  but  there  are  some 
advantages  which  will  offset  this  extra  labor.  One  of  the 
chief  advantages  is  the  ability  to  pass  shoes  through  the 
works  in  a  shorter  average  time. 

In  laying  out  the  detailed  estimates  in  Chapter  5,  the 
two  sheet  a  day  method  is  used. 

It  is  impossible  to  describe  a  Production  System  which 
will  seemingly  fit  all  cases,  and  the  following  outline  must 
not  be  considered  other  than  in  the  line  of  a  general  plan. 

The  equipment  of  forms  and  appliances  necessary  varies 
in  individual  instances,  but  in  general  is  about  as  follows: 

REPORTS  AND  FORMS 

1 .  Analysis  of  Orders  Received . 

2.  Analysis  of  Shoes  Put  into  Works. 

o  (  Weekly   Balance   of   Goods   Ahead   of  the  Works. 

O.    A 

(  Obtained  from  1  and  2. 

4.  Last  Ledger. 

5.  Production  or  Day  Sheets. 

6.  Calendar  and  Time-Table. 

7.  Tracers. 

APPLIANCES 
Typewriter. 
Duplicating  Device. 

Files  to  hold  Sheets  at  Checking  Stations. 
Time  Stamps  at  Checking  Stations. 
Tag  Files  in  Office. 


SHOE  MANUFACTURING  ORGANIZATION     139 

The  following  are  brief  descriptions  of  the  use  of  the 
foregoing  forms.  Copies  of  forms  themselves  are  not  given, 
with  the  exception  of  the  Last  Ledger,  as  such  forms  must 
be  adapted  to  individual  conditions. 

ANALYSIS  OF  ORDERS  RECEIVED 

The  purpose  of  this  record  is  to  show  as  completely  as  is 
necessary  the  burdens  which  are  about  to  be  placed  upon  the 
factory  and  its  equipment,  such  for  instance  as  the  quantities 
of  different  kinds  of  shoes  to  be  made,  as  Buttons,  Oxfords, 
etc.;  the  number  of  pairs  to  be  made  on  each  style  of  last, 
and  the  quantities  of  tan  and  patent  leather  shoes,  etc. 

This  Analysis  of  Orders  should  be  kept  by  shipping 
periods.  By  this  is  meant,  the  dividing  of  each  month 
into  two,  three  or  four  parts  or  periods,  as  seems  advisable, 
and  assigning  all  goods  to  a  certain  period,  rather  than  to  an 
individual  day  in  that  period. 

This  presents  a  much  simpler  proposition  than  an  at- 
tempt to  operate  by  specific  dates,  although  after  a  factory 
has  been  organized  and  operated  upon  a  satisfactory  pro- 
duction basis  for  some  considerable  length  of  time,  actual 
dates  may  be  used  with  complete  success.  For  a  beginning, 
the  division  of  each  month  into  two  periods,  from  first  to 
fifteenth,  inclusive,  and  from  sixteenth  to  thirty-first,  in- 
clusive, will  be  found  to  be  quite  satisfactory. 

The  Analysis  of  Orders  Received  can  best  be  kept  in  a 
loose-leaf  form,  one  page  being  assigned  to  each  delivery 
period.  The  ruling  of  this  form  depends  upon  the  number 
of  features  of  which  it  is  necessary  to  keep  track. 

ANALYSIS  OF  SHOES  PUT  INTO  WORKS 

This  report  so  far  as  the  form  is  concerned  is  identical 
with  the  Analysis  of  Orders  Received,  and  on  it  are  entered, 


140    SHOE  MANUFACTURING  ORGANIZATION 

in  the  same  detail,  the  goods  as  they  are  sent  into  the 
works. 

WEEKLY  BALANCE  OF  GOODS  AHEAD  OF  THE  WORKS 

This  balance  is  obtained  from  the  two  foregoing  analytical 
reports,  and  the  form  used  is  exactly  the  same. 

This  report  is  the  difference  between  the  Orders  Re- 
ceived and  the  Goods  Placed  in  the  Works,  and  shows  in 
detail  what  is  ahead  of  the  factory.  It  is  the  basis  upon 
which  deliveries  may  be  definitely  promised,  and  is  the 
means  of  utilizing  factory  equipment  to  the  greatest  ca- 
pacity and  advantage.  It  also  is  the  source  of  knowledge 
of  new  equipment  requirements. 

It  is  a  self-evident  fact  that  it  is  impossible  to  intelli- 
gently promise  deliveries  unless  knowledge  of  factory  pro- 
ducing capacity  is  at  hand.  It  is  impossible  to  purchase 
materials  intelligently  unless  requirements  are  known,  and 
it  is  impossible  to  purchase  equipment  intelligently  unless 
producing  capacity  and  requirements  are  known. 

Almost  every  manufacturer  of  shoes  has  had  more  or  less 
experience  in  attempting  to  perform  the  impossible;  in 
attempting  to  get  more  shoes  through  the  factory 
than  the  equipment  could  care  for;  in  attempting  to  pass 
shoes  rapidly  through  the  congested  plant,  and  in  attempt- 
ing to  force  the  production  of  goods  for  which  some  of  the 
necessary  materials  were  lacking. 

A  careful  study  and  the  intelligent  use  of  the  informa- 
tion disclosed  in  a  Report  of  Shoes  Ahead  of  the  Works 
will  almost  completely  overcome  the  most  serious  difficulties 
of  factory  operation. 

THE  LAST  LEDGER 
The  Last  Ledger  is  a  record  showing  the  use  of  lasts  and 


SHOE  MANUFACTURING  ORGANIZATION     141 


^WIDE    LAST  RECORD 

(Form  W.)     2328-1-30  Small,  Nichols  &  Co.,  Inc.,  Boston 


SHEET 

IN   OUT 

1 

- 

2 

- 

3 

. 

4 

_ 

5 

- 

6 

- 

7 

. 

8 

. 

9 

- 

10 

PAIRS 

IN  OUT  BAL. 

"Inventory 

50 

40 

60 

50 

80 

75 

100 

85 

90 

70 

80 

60 

70 

50 

60 



1020 

1 

5 

3 

9 

5 

15 

6 

12 

7 

10 

6 

8 

86 

Balance 

50 

40 

55 

47 

71 

70 

85 

79 

78 

63 

70 

54 

62 

50 

60 

3 

10 

8 

15 

12 

25 

18 

20 

15 

16 

11 

12 

5 

9 

176 

Balance 

50 

40 

45 

39 

56 

58 

60 

61 

58 

48 

54 

43 

50 

45 

51 



4 

5 

5 

12 

9 

15 

12 

20 

16 

18 

17 

16 

12 

12 

5 

5 

179 

Balance 

45 

35 

33 

30 

41 

46 

40 

45 

40 

31 

38 

31 

38 

40 

46 

6 

2 

2 

5 

4 

10 

5 

10 

5 

9 

7 

8 

4 

5 

2 

5 

83 



Balance 

43 

33 

28 

26 

31 

41 

30 

40 

31 

24 

30 

27 

33 

38 

41 

8 

3 

2 

4 

3 

8 

7 

12 

16 

9 

9 

8 

7 

8 

5 

9 

110 

Balance 

40 

31 

24 

23 

23 

34 

18 

24 

22 

15 

22 

20 

25 

33 

32 

9 

2 

2 

3 

3 

4 

3 

7 

6 

7 

6 

3 

4 

2 

2 

2 

56 

Balance 

38 

29 

21 

20 

19 

31 

11 

18 

15 

9 

19 

16 

23 

31 

30 

10 

4 

4 

7 

5 

12 

10 

11 

10 

12 

9 

10 

8 

8 

4 

4 

118 

808 

Balance 

~ 

34 

25 

14 

15 

7 

21 

0 

8 

3 

0 

9 

8 

15 

27 

26 

212 

*1 

5 

3 

9 

5 

15 

6 

12 

7 

10 

6 

8 

«— 

808 

86 

86 

298 

Balance 

34 

25 

19 

18 

16 

26 

15 

14 

15 

7 

19 

14 

23 

27 

26 

12 

5 

4 

7 

5 

12 

9 

12 

7 

8 

6 

5 

2 

4 

86 

Balance 

34 

25 

14 

14 

9 

21 

3 

5 

3 

0 

11 

8 

18 

25 

22 

176 

262 

*3 

10 

8 

15 

12 

25 

18 

20 

15 

16 

11 

12 

5 

9 

894 

388 

Balance 

34 

25 

24 

22 

24 

33 

28 

23 

23 

15 

27 

19 

30 

30 

31 

15 

Et 

0. 

"These  figures  should  always  be  entered  in  red. 


142    SHOE  MANUFACTURING  ORGANIZATION 

the  quantities  available  for  use.  It  is  preferably  a  loose- 
leaf  affair,  a  separate  page  being  used  for  each  width  of  each 
last. 

A  sample  of  this  form,  which  is  almost  universal  in  its 
application,  is  illustrated  herewith  (Form  W). 

It  is  obvious  that  this  ledger  to  be  of  value  must  be 
opened  by  the  entry  of  a  complete  and  accurate  inventory 
of  lasts,  taken  by  styles,  sizes  and  widths. 

This  inventory  should  be  entered  on  the  Last  Ledger  on 
the  first  line  marked  "Inventory,"  and  the  total  of  all  pairs 
on  this  line  extended  in  the  last  column  marked  "Balance." 
This  entry  should  be  made  in  red  ink. 

The  following  description  of  operating  a  Last  Ledger  is 
the  method  used  for  Welt  and  Turned  shoes.  McKays  are 
taken  care  of  in  a  simpler  manner. 

When  tags  are  selected  for  the  compiling  of  a  Production 
Sheet,  the  number  of  pairs  of  each  size  and  width  of  last 
required  must  be  entered  on  the  proper  page  of  the  Last 
Ledger,  care  being  taken  to  see  that  the  sizes  are  placed 
in  the  proper  columns.  Entry  must  also  be  made  in  the 
column  marked  "Sheet  In"  of  the  sheet  number  on  which 
these  lasts  apply,  and  in  the  column  "Pairs  In,"  the  total 
number  of  pairs  of  the  given  last  and  width. 

The  next  step  is  to  obtain  the  balance  of  unused  lasts  by 
subtracting  the  pairs  used  from  the  inventory,  size  for  size. 
The  succeeding  sheets  are  handled  in  a  similar  manner, 
except  that  the  balance  is  obtained  by  subtracting  from  the 
previous  balance  instead  of  from  the  inventory.  Care 
must  be  taken  that  no  more  shoes  are  placed  in  the  works 
than  there  are  lasts  available. 

After  a  certain  number  of  sheets  have  been  entered,  it 
will  be  evident  that  there  will  be  insufficient  lasts  remaining, 
making  it  impossible  to  enter  more  shoes.  This  situation  is 


SHOE  MANUFACTURING  ORGANIZATION     143 

remedied  by  adding  to  the  last  remaining  balance  on  the 
Last  Ledger  such  lasts  as  have  completed  their  service  in 
shoes  and  are  again  available. 

To  ascertain  which  lot  of  lasts  are  available  at  any  time, 
it  is  necessary  to  consult  the  Factory  Time  Schedule  and 
ascertain  how  many  days  lasts  actually  remain  in  shoes. 
If,  for  instance,  the  lasts  remain  in  shoes  five  days,  or  a 
period  covered  by  ten  sheets,  it  is  evident  that  the  lasts 
used  on  Sheet  No.  1  again  become  available  for  Sheet  No. 
11.  However,  it  takes  some  time  to  remove  lasts  from 
shoes  and  to  select  them  for  their  re-use;  therefore,  it  is 
preferable,  everything  considered,  to  allow  at  least  a  period 
including  one  extra  sheet,  which  in  the  given  instance 
would  render  them  available  for  the  twelfth  sheet.  It  is 
possible,  therefore,  to  ascertain  the  lasts  available  by  sub- 
tracting the  number  "12"  from  the  sheet  number  about  to 
be  entered,  and  all  lasts  on  the  sheet  number  remaining,  or 
on  sheets  bearing  lower  numbers,  if  not  previously  used,  are 
available. 

It  is  preferable  before  each  sheet  is  entered  to  bring  down 
and  add  to  the  final  balance  all  lasts  which  may  be  available. 
In  doing  this,  enter  in  the  column  marked  "Sheet  Out  "  the 
sheet  number  which  is  brought  down;  in  the  various  size 
columns,  the  number  of  pairs  of  each  size  brought  down,  and 
in  the  column  marked  "Pairs  Out"  the  total  number  of 
pairs.  Adding  these  pairs  of  lasts,  size  for  size,  to  the  previ- 
ous balance,  will  give  a  new  balance  of  the  lasts  available 
for  the  next  sheet.  The  work  is  thus  performed  as  succeed- 
ing sheets  are  entered. 

The  work  of  keeping  a  Last  Ledger,  while  not  difficult, 
requires  a  great  deal  of  care,  for  if  mistakes  are  made,  either 
there  will  be  insufficient  lasts  when  shoes  reach  the  lasting 
department,  or  else  records  will  show  that  there  are  not 


144     SHOE  MANUFACTURING  ORGANIZATION 

sufficient  lasts,  when  in  reality  there  is  an  abundance; 
therefore  it  is  necessary  to  prove  the  accuracy  of  the  work 
performed.  It  is  for  this  purpose  that  the  two  columns 
marked  "Pairs  In"  and  "Pairs  Out"  are  provided. 

To  prove  the  accuracy  of  the  work,  find  the  total  of  each 
of  these  columns.  Also  find  the  total  of  the  final  balance, 
entering  this  total  in  the  column  marked  "Balance."  If 
the  work  has  been  accurately  performed,  the  total  of  column 
marked  "Pairs  In"  less  the  total  of  column  marked  "Pairs 
Out,"  plus  the  total  of  the  final  balance  will  equal  the  original 
inventory. 

If  the  work  has  been  incorrectly  performed,  the  proof 
will  show  it,  except  that  pairs  of  sizes  may  be  inadvertently 
shifted  from  one  column  to  another,  either  by  accident  or 
when  shoes  are  made  up  or  down  a  half  size  or  size. 

To  ascertain  whether  mistakes  of  this  kind  have  been 
made,  add  to  the  pairs,  size  for  size,  in  the  final  balance,  all 
sheets  which  have  not  become  available,  and  the  total  will 
equal  the  number  of  pairs  for  the  corresponding  sizes  in  the 
original  inventory. 

The  proof  of  the  total  number  of  pairs  of  lasts  should  be 
made  each  day,  then  an  error  is  quickly  detected  and  easily 
corrected. 

The  proof  of  the  total  number  of  pairs  of  each  individual 
size  should  be  made,  if  possible,  at  least  once  a  week. 

Various  forms  for  keeping  last  records  have  been  devised 
by  different  people  from  time  to  time,  some  of  which  are 
simpler  than  the  method  described  above.  Everything  con- 
sidered, the  method  described  offers  advantages  found  in  no 
other  scheme,  as  it  presents  a  complete  record  of  the  manipu- 
lation of  every  size  and  width  of  every  style  of  last,  and  if 
errors  have  been  made,  they  may  be  easily  rectified.  Also, 
if  it  is  desired  to  send  shoes  through  the  factory  on  special 


SHOE  MANUFACTURING  ORGANIZATION    145 

schedule,  as  is  sometimes  the  case,  this  form  of  Last  Ledger 
gives  absolute  knowledge  of  just  what  can  be  done  in  that 
direction. 

It  will  be  understood  that  all  purchases  of  lasts  must  be 
entered  on  the  Last  Ledger  and  all  lasts  destroyed,  broken 
or  otherwise  disposed  of,  must  be  deducted  from  it. 

Many  factories  have  attempted  to  operate  a  sheet  sys- 
tem without  the  aid  of  an  adequate  Last  Ledger,  but  no 
factory  has  ever  yet  succeeded  in  so  operating  a  factory  with 
a  minimum  of  expenditure  of  last  equipment.  The  saving 
of  the  clerical  cost  of  keeping  a  Last  Ledger  is  mighty  ex- 
pensive economy. 

PRODUCTION  SHEETS 
(Sometimes  called  Day  or  Work  Sheets) 

These  are  sheets  of  paper  on  which  is  printed  certain 
information  taken  from  the  tags.  This  information  usually 
consists  of  the  case  or  tag  number,  number  of  pairs,  style  of 
shoes,  etc.,  the  amount  of  information  depending  on  the 
needs  of  the  various  departments  through  which  the  shoes 
are  to  pass. 

After  tags  have  been  selected  for  a  sheet,  and  have  been 
entered  on  the  Last  Ledger,  they  should  be  arranged  in  some 
pre-determined  manner  with  the  proper  case  numbers  in 
rotation. 

The  sheet  itself  is  then  written,  preferably  on  a  type- 
writer with  a  duplicating  ribbon.  From  this  original  copy 
the  required  number  of  copies  may  be  reproduced  on  a 
duplicating  appliance.  There  must  be  at  least  one  copy  for 
each  checking  station,  plus  whatever  copies  are  needed  for 
office  records. 

The  copies  which  are  to  be  placed  at  checking  stations 
should  each  be  marked  with  the  name  and  number  of  the 


146     SHOE  MANUFACTURING  ORGANIZATION 

checking  station  to  which  it  is  assigned,  and  the  day  and 
hour  upon  which  it  is  to  be  completed  at  that  station,  the 
date  being  found  by  reference  to  the  Factory  Calen- 
dar. 

These  Production  Sheets  serve  three  purposes:  First, 
to  give  the  heads  of  departments  information  as  to  the 
quantities  and  kinds  of  shoes  to  expect;  second,  when  to 
expect  them;  third,  a  means  of  knowing  when  shoes  have 
passed  the  various  stations. 

CALENDAR  AND  TIME-TABLE 

A  Calendar,  as  the  name  implies,  is  a  time  record  and 
may  be  called  a  dispatching  sheet,  as  on  it  is  noted  the  time 
schedule  of  each  sheet,  showing  the  day  and  hour  set  for 
completion  at  each  checking  station,  and  also  the  day  and 
hour  of  actual  completion. 

A  Calendar  may  be  made  in  numerous  ways  by  ruling 
a  sheet  of  paper  with  vertical  and  horizontal  columns,  plac- 
ing the  days  of  the  month  in  one  margin  and  the  checking 
stations  in  the  other.  The  preferable  way  is  perhaps  to 
have  the  days  of  the  month  on  the  left-hand  vertical  margin, 
with  as  many  vertical  columns  as  there  are  checking  stations. 
By  tabulation  opposite  the  dates  and  under  the  checking 
stations  are  noted  the  sheet  numbers  due  to  pass  the  various 
stations  on  the  dates  indicated.  The  time  the  tags  are 
scheduled  to  leave  the  office  should  be  placed  on  the  Calen- 
dar as  one  of  the  checking  stations,  it  being  as  essential  to 
keep  tabs  on  the  office  as  on  any  other  department. 

It  is,  of  course,  necessary  to  arrange  a  Factory  Time- 
table before  the  Calendar  can  be  filled  in.  By  "Time- 
table" is  meant  the  number  of  days  or  hours  required  to 
pass  shoes  through  each  department. 

In  arranging  a  Time-table,  care  must  be  taken  to  allow 


SHOE  MANUFACTURING  ORGANIZATION      147 

sufficient  time  for  the  completion  at  each  station  of  the  last 
case  of  shoes  on  each  sheet. 

There  are  in  use  several  methods  of  passing  shoes  by 
checking  stations,  but  in  any  event,  it  is  customary  in  well- 
regulated  factories  not  to  permit  a  workman  to  operate 
on  a  case  of  shoes  if  any  cases  on  preceding  sheets  are  in- 
completed  at  his  operating  point.  Some  factories  prefer 
to  pass  all  the  shoes  on  one  sheet  at  one  time.  This  is  not 
perfection  in  operating  a  production  system  as  it  does  not 
permit  an  absolutely  steady  and  uniform  volume  of  shoes 
to  be  moving  at  all  times.  A  much  better  way,  after  some 
perfection  has  been  attained,  is  to  require  the  movement  of 
a  certain  number  of  pairs  each  hour.  That  is,  have  pro- 
duction arranged  on  an  hourly  basis.  This  offers  a  means  of 
obtaining  maximum  efficiency  which  it  is  difficult  to  obtain 
in  any  other  manner. 

It  must  be  remembered  in  making  Factory  Time-tables 
that  the  best  possible  results  can  hardly  be  attained  at  the 
start,  but  the  entire  factory  organization,  both  supervisory 
and  operating,  must  be  accustomed  to  the  production  sys- 
tem in  order  to  appreciate  all  its  good  features  and  take  ad- 
vantage of  them. 

In  some  factories  only  one  Time-table  is  necessary. 
This  may  consume  a  total  time  of  from  fourteen  to  twenty- 
two  or  three  working  days,  the  former  being  shorter  than 
ordinarily  found,  and  the  latter  being  somewhat  longer  than 
is  necessary  under  any  ordinary  conditions.  Nevertheless, 
it  is  possible  when  perfection  is  approached  to  make  shoes 
and  make  them  correctly  in  a  remarkably  short  period  of 
time.  Of  course,  in  order  to  do  this,  factory  conditions  have 
got  to  be  very  nearly  right. 

In  some  factories  it  is  advisable  to  maintain  more  than 
one  time  schedule.  In  other  words,  a  regular  running  time 


148     SHOE  MANUFACTURING  ORGANIZATION 

of  perhaps  eighteen  days  may  be  used  with  a  special  ten  or 
twelve-day  schedule,  when  making  such  special  hurry  lots 
as  the  policy  of  the  factory  may  require. 

Still  another  schedule  may  be  used  for  making  special 
pairs. 

It  is  usually  found  that  concerns  making  shoes  for  the 
retail  trade  require  more  elaborate  time  schedules  than  those 
making  shoes  for  the  jobbing  trade. 

The  laying  out  of  the  Factory  Time-table  is  a  matter  of 
great  importance,  and  one  that  requires  a  complete  knowl- 
edge of  shoe  manufacturing  and  considerable  experience  in 
operating  production  systems. 

If  the  required  means  are  taken,  it  is  possible  to  make 
any  ordinary  shoes  in  from  ten  to  fourteen  days.  Many  will 
dispute  this  assertion,  but  the  fact  remains  that  with  ade- 
quate supervision  and  the  necessary  facilities,  such  speed  is 
not  only  possible  but  practical.  The  savings  from  such 
speed  are  obvious. 

TRACERS 

When  no  provision  has  otherwise  been  made  for  the 
quick  passage  of  special  cases,  special  pairs,  or  trial  shoes, 
and  it  is  necessary  to  make  them  in  a  very  short  period  of 
time,  they  may  be  followed  by  means  of  a  Tracer. 

What  form  the  Tracer  takes  depends  largely  on  what  it  is 
to  be  used  for,  but  in  any  event,  it  is  what  may  be  termed  a 
special  Sheet  System  in  itself. 

Inasmuch  as  these  shoes  pass  through  the  factory  much 
more  rapidly  than  the  ordinary  schedule  calls  for  and  inas- 
much as  the  use  of  a  Tracer  becomes  more  or  less  a  burden 
upon  the  heads  of  departments,  it  has  been  found  to  be  a 
good  scheme  to  have  a  tracer  system  in  charge  of  the  tele- 
phone operator.  As  shoes  pass  from  station  to  station,  the 


SHOE  MANUFACTURING  ORGANIZATION    149 

telephone  operator  may  be  notified  in  any  convenient  manner 
and  records  kept  by  her.  If  they  fail  to  pass  according  to 
schedule,  it  then  becomes  her  duty  to  notify  the  department 
at  fault.  In  this  way  it  is  usually  possible  to  get  quick 
action. 

CHECKING  STATIONS  AND  CHECKING 

By  "Checking  Stations"  is  meant  points  located  in 
different  parts  of  the  factory  where  the  passage  of  shoes  is 
recorded.  They  should  be  so  located  that  the  passing  of 
shoes  is  recorded  at  least  once  each  working  day.  Some 
departments  will  require  only  one  station,  while  other  de- 
partments may  require  several.  The  method  of  conducting 
departments  may  also  make  it  necessary  to  have  several 
stations  to  take  care  of  different  parts  of  shoes. 

In  any  event,  each  station  should  be  provided  with  a 
suitable  file  for  holding  the  copies  of  Production  Sheets. 
These  files  may  be  easily  made  of  board  of  convenient  size, 
provided  with  spring  clips,  so  that  the  sheets  may  be  readily 
inserted  or  removed. 

Some  checking  stations  require  very  little  information. 
In  fact,  sometimes  almost  nothing  but  the  case  numbers  is 
needed,  and  for  such  stations  complete  copies  of  sheets  need 
not  be  made. 

As  lots  of  shoes  are  completed  and  ready  to  pass  the 
various  checking  stations,  the  case  numbers  are  cancelled 
on  the  sheets.  This  shows  at  a  glance  just  what  cases  are 
not  completed.  When  all  the  case  numbers  on  a  sheet  have 
been  entirely  crossed  off,  the  sheet  should  be  marked  with 
the  date  and  hour  of  completion  and  sent  to  the  office  for 
record.  It  is  desirable  that  each  station  be  provided  with 
an  automatic  time  stamp,  as  then  all  controversy  as  to  the 
exact  time  when  sheets  are  completed  is  avoided.  It  is  also 


150     SHOE  MANUFACTURING  ORGANIZATION 

a  good  custom  to  take  sheets  when  completed  to  the  foreman 
of  the  next  department  for  his  signature,  this  being  an  auto- 
matic notice  to  him  that  all  the  shoes  on  the  sheet  in  question 
are  in  his  department. 

It  should  be  unnecessary  to  state  that  all  cases  should  be 
full  and  perfect  before  passing  checking  stations,  or  at  least 
before  passing  the  final  checking  station  in  any  department. 

When  the  sheets  have  been  returned  to  the  office,  they 
should  be  recorded  on  the  Factory  Calendar  by  noting 
thereon  either  the  date  and  hour  of  completion  at  the  sta- 
tions to  which  they  belong,  or  by  noting  the  time  in  hours 
that  they  are  ahead  of  or  behind  the  schedule,  the  entries 
of  delayed  work  being  made  in  red  ink.  If  this  method  is 
pursued,  the  Calendar  will  show  at  a  glance  the  record  of 
performance  and  the  perfection  with  which  departments  are 
operated.  Results  may  also  be  recorded  on  charts  if 
preferred. 

Such  in  general  is  an  outline  of  the  principal  features 
of  operating  a  Production  System.  The  actual  details  of 
operation  depend  so  much  on  existing  conditions  that  it 
seems  rather  impractical  to  attempt  to  go  into  it  so  minutely 
as  to  describe  them. 

SUMMARY 

The  success  or  failure  of  any  Production  System  depends 
largely  upon  the  carefulness  with  which  the  planning  is 
done  and  upon  the  faithfulness  with  which  the  plans  are 
carried  out. 

Running  a  factory  by  a  Production  System  is  quite 
similar  to  the  operation  of  a  railroad,  and  the  railroad  to  be 
successfully  operated  must  of  necessity  adhere  closely  to  its 
train  schedules. 

As  in  the  case  of  a  railroad,  if  anything  occurs  to  dis- 


SHOE  MANUFACTURING  ORGANIZATION     151 

turb  the  sequence  of  affairs,  means  must  be  provided  to 
straighten  out  matters. 

Necessary  as  it  is  to  adhere  to  fixed  schedules,  it  must 
not  be  presumed  that  a  well-operated  Production  System  is- 
not  extremely  flexible;  on  the  contrary,  almost  anything  may 
be  accomplished  without  creating  serious  disturbances. 

Many  things  may  be  done  to  facilitate  operation.  Con- 
venient case  numbering  schemes,  the  use  of  colors,  etc.,. 
may  be  made  of  considerable  assistance. 

A  great  many  factories  are  being  operated  on  what  are 
called  "Sheet  Systems,"  but  which  in  reality  are  not  sheet 
systems  at  all.  They  may  use  sheets,  but  without  any 
system. 

The  sheet  system  in  many  instances  consists  merely  of 
tabulating  on  sheets  of  paper  the  case  numbers,  with  usually 
some  other  details  of  the  shoes  placed  in  the  works.  These 
sheets  are  then  distributed  through  factory  departments 
and  more  or  less  endeavor  is  made  to  pass  shoes  through 
the  works  in  the  rotation  of  the  sheets.  This  is  sometimes 
possible,  but  more  often  impossible,  simply  because  enough 
time  and  study  have  not  been  expended  in  planning. 

There  is  nothing  to  be  gained  by  having  a  Production 
System  which  is  more  elaborate  than  is  necessary  to  produce 
desired  results.  On  the  other  hand,  there  is  something 
lacking  if  the  desired  results  are  not  achieved  and,  of  course, 
the  actual  degree  of  perfection  to  be  attained  depends  largely 
upon  each  individual's  conception  of  perfection. 

A  good  Production  System  closely  followed  is  without 
doubt  one  of  the  greatest,  if  not  the  greatest,  of  aids  in  pro- 
ducing shoes,  but  if  it  is  not  carefully  planned  and  well  ex- 
ecuted, it  is  apt  to  become  more  of  a  joke  than  anything  else. 


CHAPTER  16 
CUTTING  DEPARTMENT 

TWO  expressions  have  been  repeated  so  frequently 
that  they  have  almost  become  maxims.  One  is, 
"The  cutting  room  is  where  profits  are  made  or 
lost";  the  other,  "The  cutter  can  easily  throw  his  wages 
on  the  floor."  These  two  expressions  indicate  the  im- 
portance with  which  manufacturers  have  always  regarded 
the  Cutting  Department.  No  one  questions  that  it  is  one 
of  the  most,  if  not  the  most,  important  department  in  every 
shoe  factory.  It  became  even  more  important  with  the 
introduction  of  the  clicking  machine,  because  of  its  tremen- 
dous product  and  low  labor  cost.  While  all  shoe  manufac- 
turers have  considered  the  Cutting  Department  to  be  of 
the  utmost  importance,  they  have,  in  altogether  too  many 
instances,  failed  in  their  attempts  to  get  the  greatest  value 
out  of  the  raw  stock  consumed.  The  chief  reasons  for  these 
failures  have  been  —  first,  ignorance;  second,  misconception 
of  the  ratio  of  cost  of  material  to  cost  of  labor;  third,  unwill- 
ingness to  provide  accurate  data  showing  what  the  cutting 
room  produces,  and  the  costs. 

In  considering  these  three  causes  of  failure,  it  is  well  to 
remember  that  the  shoe  manufacturing  business,  unlike 
many  other  industries,  has  developed  from  individual  shoe- 
makers to  the  factory  system  in  a  comparatively  short  time. 
When  shoe  manufacturing  under  the  factory  system  was  in 

153 


154    SHOE  MANUFACTURING  ORGANIZATION 

its  infancy,  many  other  lines  of  industry  had  reached  a  point 
of  comparatively  high  development,  and  have,  consequently, 
reached  a  higher  state  of  perfection  to-day  than  has  the 
shoe  business,  despite  its  remarkable  growth.  One  of  the 
chief  reasons  for  this  is  that  hides  and  skins  were  always 
classed  as  a  by-product  and  the  making  of  footwear,  com- 
pared with  other  industries,  was  not  looked  upon  as  being 
a  high-class  trade.  The  same  holds  true  to  a  greater  or  less 
extent  even  to-day,  and  as  a  result  it  is  difficult  to  find  men 
technically  trained  to  handle  leather  with  mathematical 
precision.  The  requisite  training  for  high  positions  in 
nearly  all  other  industries  is  accomplished  not  alone  by 
practical  experience,  but  by  high-grade  technical  and  trade 
schools  as  well.  Whatever  development  has  taken  place 
in  the  shoe  industry  has  been  brought  about  largely  through 
the  accomplishments  of  trained  mechanics  and  mechanical 
engineers  in  the  construction  of  machinery,  resulting  in  the 
necessity  of  a  more  systematic  conduct  of  the  factory  as  a 
whole,  and  bringing  the  construction  or  actual  putting 
together  of  shoes  on  to  a  comparatively  high  basis. 

In  the  Cutting  Department,  however,  there  has  not  been 
such  marked  advance.  There  have  been  some  improve- 
ments in  the  cutting-room  equipment,  such  as  better 
patterns  and  cutting  boards,  and  notably  in  the  introduction 
of  the  clicking  machine,  but  the  leather  itself  in  the  great 
majority  of  factories  is  handled  in  much  the  same  way  as 
it  was  years  ago. 

Considering  the  circumstances  surrounding  the  growth 
and  development  of  shoe  manufacturing,  one  realizes  that 
the  manufacturer  is  hardly  to  be  blamed  for  the  first  cause 
of  failure  mentioned  above.  The  manufacturer  cannot  be 
expected  to  be  a  highly  trained,  technical  man  himself,  and 
he  has  not  had  the  advantage  that  men  in  other  industries 


SHOE  MANUFACTURING  ORGANIZATION  155 

have  possessed  of  calling  on  trained  assistants.  We  cannot, 
however,  excuse  him  for  failure  because  of  the  second  and 
third  reasons. 

Good  judgment,  based  upon  accurate  figures,  is  all  that 
is  necessary  to  decide  the  best  course  to  pursue  in  regard 
to  labor.  Improvements  in  machinery  have  always  been 
followed  by  a  reduction  in  the  price  paid  for  operating  it. 
While  a  reduction  in  the  price  paid  for  operating  a  machine 
may  produce  disastrous  results  if  the  reduction  exceeds  a 
logical  point,  it  may  not  incur  such  serious  consequences  as 
would  a  reduction  in  the  labor  of  handling  valuable  raw 
material.  The  labor  cost  of  cutting  leather  is  a  small  per 
cent  of  the  material  cost,  and  the  saving  made  by  reductions 
in  the  price  of  labor,  has,  in  many  cases,  been  problematical, 
if  not  resulting  in  an  increased  cost  of  product.  It  is  the 
invariable  rule,  when  cutters  receive  a  lower  piece  price,  to 
increase  the  speed  of  working,  and  to  use  less  care  in  the 
placing  of  patterns;  the  result  is  the  use  of  more  stock  than 
necessary,  the  production  of  uppers  of  an  inferior  quality, 
or  both.  A  reduction  in  the  price  paid  for  day  labor  means, 
other  things  being  equal,  the  employment  of  cutters  of  in- 
ferior ability,  with  the  above  results.  The  ratio  between  the 
cost  of  material  and  the  cost  of  labor  is  a  very  vital  problem, 
and  one  which  requires  exceedingly  careful  considera- 
tion. 

To  the  third  cause  of  failure  many  manufacturers  are 
indebted  for  their  non-success.  While  a  great  many  manu- 
facturers are  ignorant  of  the  proper  methods  of  keeping 
informed  as  to  the  actual  conditions  in  the  cutting  room, 
many  assume  that  the  clerical  labor  involved  is  a  useless 
and  unnecessary  expense.  Whenever  cutting-room  systems 
are  mentioned  to  such  manufacturers,  they  throw  up  their 
hands  in  holy  horror  and  exclaim,  "Red  Tape!"  They  will 


156     SHOE  MANUFACTURING  ORGANIZATION 

tell  you  that  they  keep  such  a  close  watch  of  the  cutting 
room  that  nothing  can  escape  their  attention. 

A  careful  consideration  of  the  difficulties  confronting 
any  manufacturer  in  his  cutting  department  will  convince 
the  most  sceptical  that,  to  keep  fully  posted,  he  must  have 
information  other  than  that  obtained  by  the  eye  and  ear. 
The  cost  of  the  upper  is  one  of  the  principal  items,  in  most 
instances  the  greatest  single  item,  which  enters  into  the 
construction  of  a  shoe.  The  modern  contractor  or  engineer 
can  tell,  with  wonderful  accuracy,  the  amount  of  material 
required  in  any  kind  or  size  of  building,  railroad,  ship,  or 
whatever  he  may  be  about  to  construct.  How  many  shoe 
manufacturers  can  tell,  with  anything  like  a  relative  ac- 
curacy, the  amount  of  leather  from  which  a  given  case  of 
shoes  may  be  cut?  It  may  be  argued  that  the  value  of  the 
material  in  the  case  of  shoes  is  a  small  amount  compared 
with  the  value  of  the  material  in  a  modern  skyscraper, 
but  it  should  be  remembered  that  in  constructing  thousands 
of  cases  of  shoes,  the  aggregate  cost  of  material  amounts 
perhaps  to  the  cost  of  the  material  in  a  skyscraper,  which 
is  also  composed  of  units.  The  gain  or  loss  of  a  relatively 
small  per  cent  on  each  case  of  shoes  will  make  a  big  differ- 
ence in  profits  at  the  end  of  a  year. 

There  are  many  factors  which  cause  profits  or  losses, 
among  the  most  important  being  the  quality  and  clearness 
of  the  leather  and  size  of  the  skins  cut,  the  combinations  of 
patterns  used,  the  sizes  and  widths  produced,  the  way  the 
work  is  given  to  the  cutter  and  the  ability  of  the  latter. 

It  is  clearly  evident  that  the  manufacturer  needs  be 
continually  on  guard  and  fortified  with  as  complete  in- 
formation as  possible. 

It  will  not  be  amiss  to  consider  some  of  his  difficulties  and 
their  solutions.  One  feature  which  manufacturers  strive 


SHOE  MANUFACTURING  ORGANIZATION     157 

to  gain,  and  which  often  presents  a  most  serious  problem, 
is  uniformity  of  product.  Years  ago  when  nearly  all  shoes 
were  handled  through  jobbing  houses,  many  manufacturers 
made  a  practice  of  having  two  or  three  inferior  pairs  of  shoes 
in  each  case.  Nowadays  many  manufacturers  sell  their 
product  direct  to  retailers  and  consequently  are  compelled 
to  produce  more  uniform  shoes.  The  jobber  is  likewise 
demanding  them,  and  up-to-date  manufacturers  strive  to 
have  every  pair  of  shoes  uniform  in  quality  and  appearance. 
It  is  not  expected  that  shoes  can  be  made  absolutely  alike; 
that  is  impossible,  but  they  should  be  as  nearly  alike  as  they 
can  be  made. 

Previous  to  the  introduction  of  what  may  be  termed 
"modern"  leathers,  a  fair  uniformity  was  gained  by  cutting 
shoes  in  bulk  and  sorting  them  afterwards.  This  method 
met  with  considerable  success,  not  because  of  the  method, 
but  because  of  the  material  used.  At  the  present  time  the 
same  method  would  not  be  a  success  in  many  factories 
cutting  modern  leathers.  There  are  so  many  varieties  and 
styles  of  shoes  that  the  complications  make  it  impractical. 
As  a  consequence,  the  great  majority  of  shoes  are  cut  "to 
order"  or  by  "tags,"  as  it  is  sometimes  called. 

The  feature  of  uniformity  is  complex.  No  two  skins  are 
alike,  especially  goatskins.  The  breed  of  animals  from 
which  skins  are  taken,  the  locality  in  which  they  are  grown, 
the  care  they  receive,  the  methods  of  tanning  and  finishing 
employed,  all  tend  to  produce  leathers  having  a  wide  range 
of  qualities. 

The  tanner  sorts  his  product  into  many  grades  and 
weights,  based  primarily  upon  a  selling  value  per  foot.  He 
naturally  sorts  his  leather  no  finer  than  he  is  compelled,  in 
order  to  run  his  business  at  a  satisfactory  profit,  and  he  finds 
it  more  advantageous  to  sort  for  the  general  needs  of  manu- 


158  SHOE  MANUFACTURING  ORGANIZATION 

facturers  rather  than  to  meet  the  conditions  of  any  particular 
one.     However  careful  his  sorting  may  be,  each  bundle  of 
leather  contains  skins  which,  for  manufacturing  purposes, 
are  of  many  different  values  and  cutting  qualities.     The 
manufacturer,   in  purchasing  leather,   endeavors   to   select 
that  which  will,  as  far  as  possible,  meet  his  conditions  and 
conform  to  his  idea  of  quality.     He  may  exert  the  utmost 
care  in  his  selections,  and  still  it  is  impossible  to  produce, 
economically,  uniform  shoes  from  the  leather  as  he  buys  it. 
There  are  several  ways  of  dealing  with  this  problem,  the 
following  being  the   most   commonly   used:   requiring   the 
cutter  to  produce  uniform  shoes  of  one  grade  from  the  leather 
as  received;  requiring  the  cutter  to  produce  shoes  of  two  or 
more  grades  at  the  same  time;  permitting  the  use  of  "Side 
Patterns"  to  use  up  inferior  parts,  and,  the  careful  sorting 
and  grading  of  the  leather  before  cutting.     This  last  method 
is,  without  doubt,  the  most  satisfactory  and  economical. 
It  is  impossible  to  produce,  without  excessive  waste,  uni- 
form shoes  of  one  grade  out  of  leather  as  it  comes  from  the 
tanner,  and  if  the  cutter's  judgment  is  relied  upon  to  de- 
termine the  proper  quality,  there  will  be  a  great  variation, 
particularly  if  he  is  required  to  cut  the  leather  up  clean. 

It  is  very  difficult  to  find  cutters  able  to  produce  several 
grades  of  shoes  at  the  same  time.  The  average  result  of 
this  method  of  cutting  is  loss  of  distinction  in  grades.  The 
cheapest  grade  will  be  too  good,  the  best  grade  too  poor, 
or  very  good  and  very  poor  may  be  mixed  together.  The 
use  of  side  patterns  is  unsatisfactory  in  many  instances. 
The  pieces  cut  are  usually  considered  of  relatively  little 
value,  and  it  requires  remarkably  good  judgment  to  place 
side  patterns  without  taking  stock  which  would  be  of  much 
greater  value  in  regular  grades. 

If,  on  the  other  hand,  leather   has  been   sorted    and 


SHOE  MANUFACTURING  ORGANIZATION  159 

graded  for  certain  patterns  and  qualities  of  shoes,  it  is 
much  easier  for  the  cutter  to  work  intelligently.  No  one 
will  dispute  the  fact  that  a  cutter  kept  continually  at  work 
on  one  kind  of  leather  becomes  more  proficient  than  if 
shifted  about  from  one  kind  to  another.  He  becomes  more 
proficient  if  kept  on  a  certain  style  of  pattern.  His  pro- 
ficiency will  be  still  further  increased  if  the  leather  which 
he  cuts  is  adapted  to  the  pattern  used  and  the  skins  are  of 
uniform  size,  shape  and  quality.  The  less  individual 
judgment  cutters  are  required  to  use,  the  faster  they  can 
work  and  the  more  uniform  and  satisfactory  will  be  the 
results.  There  is  no  question  but  that  when  leather  is 
properly  sorted  and  graded  before  cutting,  the  cost  of  uppers 
is  reduced  in  both  material  and  labor,  and  there  is  a  growing 
tendency  on  the  part  of  manufacturers  to  adopt  this  method. 
The  degree  of  perfection  which  may  be  obtained  depends 
upon  the  way  the  business  is  lined  up.  The  manufacturer 
who  specializes  on  standard  lines  has  a  much  simpler  prob- 
lem than  one  who  attempts  to  make  anything  and  every- 
thing. 

The  ability  of  the  cutter  is  judged  from  three  stand- 
points,—  quality  of  product,  cost  of  material,  and  speed. 
He  may  excel  on  one  point  and  lose  on  another,  but  when 
work  is  properly  presented  to  him,  it  is  not  unreasonable 
to  expect  a  correct  and  uniform  quality  at  a  pre-determined 
cost  of  material  and  labor.  He  should  be  assisted  in  pro- 
ducing quality  by  personal  instruction  from  his  foreman  or 
assistants,  and  by  access  to  standards  kept  for  his  inspection. 
The  pre-determination  of  cost  can  only  be  made  by  means 
of  an  accurate  system  of  allowances  or,  in  other  words,  by 
accurate,  mathematical  calculation. 

Many  features  fluctuate  the  amount  of  leather  necessary 
to  be  used;  for  instance,  variations  in  the  sizes  and  widths 


160      SHOE  MANUFACTURING  ORGANIZATION 

of  shoes,  the  combinations  of  patterns  used,  the  sizes  of  the 
skins  cut,  etc.  It  is  easy  to  perceive  that  a  method  of  com- 
puting allowances  which  will  take  these  diversities  into 
consideration  is  exceedingly  valuable.  When  one  considers 
that  it  costs  approximately  65%  more  to  produce  the  largest 
size  and  widest  width,  than  to  produce  the  smallest  size 
and  narrowest  width,  in  a  factory  making  shoes  of  five 
different  widths,  and  a  proportionate  amount  in  other  fac- 
tories, it  is  easy  to  realize  the  necessity  of  a  system  of  allow- 
ances. The  variation  between  extremes  amounts  in  some 
cases  to  over  70  cents  per  pair.  It  would  undoubtedly 
surprise  the  majority  of  manufacturers  if  they  knew  that 
in  round  numbers  33%  of  the  leather  cut  goes  into  waste; 
that  is,  does  not  go  into  the  outside  of  the  shoe.  Of  course, 
the  amount  of  waste  varies  more  or  less  in  different  factories, 
but  it  is  safe  to  say  that  in  no  factory  does  it  average  less 
than  25%  and  in  many  is  as  high  as  45%.  This  percentage 
is,  of  course,  figured  upon  the  actual  area  of  the  leather  cut. 
The  percentage  of  waste  varies  with  the  kind  of  leather  used, 
and  may  also  vary  on  different  sizes  and  widths  of  the  same 
pattern. 

Some  manufacturers  have  long  realized  the  necessity  of 
reducing  the  production  of  cutters  to  a  mathematical  re- 
quirement, and  as  a  result  there  are  several  methods  in 
use  by  which  attempts  are  made  to  know  what  should  be 
allowed  for  different  sizes,  widths,  leathers  and  grades. 
Various  factors  have  been  employed  as  bases,  the  three 
most  commonly  used  being  area,  weight,  and  a  percentage 
ratio  of  one  size  to  another.  None  of  these  bases  are 
sufficiently  accurate  to  be  reliable.  While,  of  course,  the 
area  of  a  pattern  has  a  great  deal  to  do  with  its  cutting 
value,  there  is  another  factor  which  has  been  largely  over- 
looked. This  is  the  shape  or  contour  of  the  pattern. 


SHOE  MANUFACTURING  ORGANIZATION     161 

Weight,  as  will  be  readily  seen,  is  merely  another  method  of 
indicating  area,  and  of  necessity  possesses  all  the  inaccura- 
cies of  area  and  many  more.  The  ratio  method,  used  in  the 
form  of  a  percentage  table,  is  inaccurate  because  the  cutting 
values  of  all  patterns  do  not  grade  alike,  hence,  a  table 
correct  for  one  pattern  will  not  necessarily  be  correct  for 
another.  In  fact,  the  inaccuracy  may  amount  to  as  much 
as  ten  or  fifteen  per  cent,  in  some  cases  even  more. 

In  order  to  understand  fully  the  problem  of  determining 
accurate  cutting  allowances,  it  is  necessary  to  study  the 
construction  and  measurements  of  lasts.  Lasts  are  gener- 
ally made  with  certain  measurements  known  as  "standard" 
measurements,  and  are  supposed  to  fit  the  requirements  of 
the  greatest  number  of  feet.  There  is,  however,  a  great 
diversity  in  the  styles  of  lasts;  even  if  made  to  conform  to 
standard  measurements  they  may  be,  and  are,  varied  in 
other  ways  to  suit  individual  ideas  and  factory  conditions, 
so  that  patterns  to  fit  them  must  of  necessity  grade  differ- 
ently, so  far  as  cutting  allowances  are  concerned.  If  the 
actual  area  of  patterns  is  taken  as  a  basis,  it  will  be  found, 
by  careful  testing,  that  while  in  some  instances  a  large  size 
of  a  certain  width  wastes  a  considerably  greater  percentage 
of  leather  than  a  small  size  of  the  same  width,  in  others  the 
reverse  will  be  true;  that  all  sizes  of  any  one  width  may 
waste  the  same  percentage,  but  that  the  percentage  for 
each  different  width  would  vary.  This  variation  in  the 
waste  is  not  due  to  the  area  of  patterns,  but  to  their  shapes, 
therefore  it  will  be  seen  that  it  is  impossible  to  build  one 
percentage  table  covering  these  variations.  Percentage 
tables  are  based  primarily  upon  the  area  of  patterns.  A 
certain  size  and  width  is  selected  as  the  average  size  of  shoes 
produced,  the  amount  of  material  taken  to  produce  uppers 
of  this  size  being  given  a  value  of  one.  The  value  of  every 


162  SHOE  MANUFACTURING  ORGANIZATION 

other  size  and  width  is  a  percentage  of  this  average  size. 
When  this  method  is  used  the  rate  of  increase  from  size  to 
size  is  the  same  for  all  patterns,  which  is  manifestly  incor- 
rect. That  this  inaccuracy  actually  does  exist  has  been 
proved  time  and  again  by  manufacturers  using  the  per- 
centage table  method.  They  have  found  that  while  it  may 
require  no  skill  on  the  part  of  a  cutter  to  produce  some  sizes 
and  widths,  it  is  absolutely  impossible  to  produce  others 
within  the  allowances.  This  is  caused  by  the  variations 
mentioned  above,  and  can,  perhaps,  be  better  illustrated 
by  the  following  diagrams  in  which  a  dotted  line  figure  is 
used  to  represent  the  grade  as  taken  from  a  percentage 
table.  The  corners  A,  B,  C,  D  represent  respectively  the 
smallest  and  largest  sizes  of  the  narrowest  and  widest  widths. 
The  average  size  is  represented  at  o.  The  diagonal  E-F 
is  the  line  along  which  the  relative  values  of  sizes  and  widths 
are  equal  to  the  average  size  o.  Consequently  all  sizes  and 
widths  above  the  line  E-F  have  a  value  less  than  the  average 
size,  and  all  below,  a  greater  value.  The  heavy  line  figures 
indicate  the  comparative  forms  which  percentage  tables 
made  for  some  particular  patterns  might  take,  and  from 
the  three  figures  given  it  will  be  seen  that  there  may  be  a 
great  diversity.  These  three  illustrations  were  made  from 
actual  patterns  but  do  not,  by  any  means,  indicate  the  great 
number  of  such  figures  which  might  be  constructed;  as  a 
matter  of  fact,  the  careful  examination  of  several  thousand 
sets  of  patterns  has  shown  no  two  which  grade  exactly  alike. 
When  using  the  Percentage  Table  Method,  it  is  evident  that 
the  rate  of  increase  from  any  given  size  to  another  is  always 
the  same,  regardless  of  pattern  or  leather.  The  amount  of 
the  increase,  expressed  in  feet,  will  vary  for  the  pattern  or 
leather  used,  but  the  rate  per  cent  is  always  the  same. 
Actually,  the  rate  varies  from  as  low  as  two-tenths  of  1%, 


(163) 


164  SHOE  MANUFACTURING  ORGANIZATION 

to  over  5%  for  a  half  size.  This  rate  of  increase  may  in 
some  instances  be  the  same  for  all  widths  of  a  set  of  patterns, 
in  other  instances  the  percentage  may  increase  for  wider 
widths  or  it  may  decrease,  and  in  some  cases  the  grade  is 
backward;  that  is,  paradoxical  as  it  may  seem,  the  smaller 
sizes  require  greater  allowances  than  the  larger  ones.  It 
will  be  seen  that  a  pattern  which  requires  two  and  one- 
quarter  feet  of  leather  to  produce  a  certain  size,  may  require 
.0045  feet  more  for  the  next  succeeding  half  size,  or  it  may 
require  .1125.  If  the  leather  cost  25  cents  per  foot,  this 
increase  would  vary  from  approximately  one  mill  to  about 
three  cents  for  one-half  size.  Surely  a  great  difference. 
What  this  rate  of  increase  is,  cannot  be  determined  by 
looking  at  a  pattern,  or  by  measuring  it. 

It  is  necessary,  moreover,  in  making  allowances,  to  take 
into  consideration  the  combination  of  patterns  which  are  to 
be  used  in  cutting.  By  this  is  meant  the  variety  of  different 
shapes.  A  given  pattern  may  cut  alone,  for  a  certain 
waste  per  cent,  but  if  cut  with  another  pattern  its  waste 
per  cent  might  be  very  different.  For  this  reason  it  is  not 
correct  to  make  fixed  allowances  for  patterns  cut  alone  and 
use  these  same  allowances  when  several  patterns  are  cut 
together.  The  allowances  for  any  given  pattern  vary  ac- 
cording to  the  other  patterns  with  which  it  is  cut,  that  is, 
for  each  separate  combination.  If  allowances  are  not  cor- 
rect, no  one  will  find  it  out  more  quickly  than  the  cutter, 
and  when  he  has  once  found  them  to  be  incorrect,  he  ceases 
to  be  guided  by  them.  Some  manufacturers  consider 
that  an  accurate  allowance  system  is  of  value  only  in  so  far 
as  it  enables  them  to  hold  their  cutters  down  to  certain 
figures.  The  real  value  lies  no  more  in  this  feature  than 
it  does  in  furnishing  the  purchasing  agent  with  exceedingly 
valuable  data  to  assist  him  in  buying  leather,  and  any  system 


SHOE  MANUFACTURING  ORGANIZATION   165 

which  fails  to  give  this  information  falls  far  short  of  what  it 
should  be.  Some  men  are  naturally  better  judges  of  leather 
than  others,  but  no  man,  however  expert,  can  buy  leather 
to  as  good  advantage  if  he  relies  solely  upon  his  instinct,  as 
he  can  if  guided  by  accurate  figures  showing  what  can  and 
cannot  be  done  with  the  different  kinds  of  leather  which 
he  buys. 

The  only  figures  of  value  are  accurate  figures.  In- 
accurate ones  are  worse  than  none.  There  is  an  old  saying 
that  "Figures  don't  lie."  It  is  nevertheless  true  that 
"liars  make  figures."  Not  that  figures  are  intentionally 
falsified,  but  inadvertently  so  because  of  lack  of  knowledge 
as  to  what  they  really  mean,  and  in  no  department  of  the 
factory  are  inaccurate  figures  so  misleading  as  in  the  cutting 
room.  The  expense  of  compiling  accurate  data  should  be 
considered  in  no  other  light  than  a  form  of  cheap  insurance 
against  waste  and  excessive  costs.  There  is  no  return 
which  warrants  the  expense  of  making  inaccurate  records. 

A  great  many  manufacturers  unwittingly  show  their 
appreciation  of  correct  figures  by  refusing  to  believe  the 
ones  they  make,  which  they  know  are  not  to  be  relied  upon. 
How  often  in  talking  with  a  manufacturer  do  we  find  that  he 
estimates  the  cost  of  his  shoes  on  one  priced  leather  and 
actually  makes  them  out  of  a  lower  priced  leather  so  as  to 
be  "safe,"  as  he  calls  it.  There  are  many  manufacturers 
who  are  accustomed  to  figuring  this  way,  and  this  fact  alone 
shows  that  the  figures  which  they  make  are  unreliable. 
Compare  the  position  of  such  men  with  the  one  who  has 
figures  upon  which  he  can  rely  and  upon  which  he  actually 
makes  estimates  of  costs. 

This  second  man  is  in  a  position  to  beat  his  competitor 
every  time,  as  far  as  the  cost  of  producing  is  concerned;  in 
other  words,  he  knows  what  his  goods  cost  him,  and  is  not 


166     SHOE  MANUFACTURING  ORGANIZATION 

obliged  to  place  his  estimate  unreasonably  high  in  order  to 
insure  himself  against  loss. 

Another  feature  often  overlooked,  is  the  increase  or  de- 
crease of  an  allowance,  due  to  substituting  a  cheaper  or 
higher  priced  material.  That  an  increase  or  decrease  is 
necessary,  when  a  cheaper  or  higher  priced  material  is  used, 
goes  without  saying,  and  every  manufacturer  should  be  pre- 
pared to  determine  at  a  moment's  notice  what  that  increase 
or  decrease  amounts  to. 

Another  source  of  expense  and  much  annoyance  in  the 
cutting  room  is  the  method  employed  to  keep  track  of 
patterns.  In  a  large  factory  making  many  different  styles, 
this  is  a  very  serious  proposition,  and  in  many  cases  men 
are  employed  who  do  nothing  except  to  see  that  the  cutters 
receive  the  right  patterns.  This  is  all  very  well  so  far  as 
it  goes,  but  in  many  instances  the  nomenclature  and  method 
of  numbering  is  so  complex  that  no  one  but  an  expert  can  fill 
the  position.  Such  a  condition  of  affairs  is  very  unsatis- 
factory, for  if  this  employee  should,  for  any  reason,  be 
discharged  or  be  sick,  the  cutting  room  is  immedi- 
ately in  a  turmoil  and  many  expensive  mistakes  are 
made. 

The  best  method  of  numbering  patterns  is,  without 
question,  what  is  known  as  the  "group  number"  method. 
This  method  is  exceedingly  simple  and  enables  any  one  to 
tell  the  exact  parts  which  go  to  make  up  any  given  shoe,  and 
the  number  which  will  appear  on  each  piece  of  pattern  to  be 
used.  A  glance  at  the  factory  tag  is  all  that  is  necessary  to 
identify  positively  just  what  is  to  be  cut.  The  advantages 
to  be  gained  by  such  a  system  of  numbering  are  so  self- 
evident  as  to  require  no  discussion  whatever. 

An  efficient  tag  and  sheet  system  is  of  untold  value  in 
conducting  a  cutting  room,  and  the  results  attained  in  this 


SHOE  MANUFACTURING  ORGANIZATION     167 

department  have  an  effect  upon  other  departments  which 
must  not  be  underestimated. 

The  system  of  production  used  has  much  to  do  with 
factory  economy  and  no  less  in  the  cutting  than  in  any  other 
department. 

Many  manufacturers  pride  themselves  upon  having  a 
small  office  force.  An  investigation  usually  shows  a  deal  of 
clerical  labor  performed  by  foremen  and  workers  in  the 
cutting  as  well  as  other  departments. 

This  is  not  economy.  There  is  one  place  for  the  clerical 
force, —  the  Factory  Office. 

The  foreman  should  have  no  clerical  work  to  perform; 
he  should  devote  his  time  to  the  cutting  of  leather. 

Upon  the  efficiency  of  the  Cutting  Department  depends 
to  a  large  extent  the  economical  conduct  of  the  Fitting 
Department.  In  many  factories  one  sees  a  veritable  stream 
of  people  passing  between  these  departments;  this  expense 
should  be  almost  entirely  eliminated. 


CHAPTER  17 
SOLE  LEATHER  DEPARTMENT 

THERE  are  almost  as  many  opinions  as  to  the  proper 
method  of  handling  Sole  Leather  as  there  are  sole 
leather  men.  The  methods  used  depend  largely 
upon  the  individuality  of  the  man  in  charge,  and  the  foreman 
who  is  successful  in  one  factory  is  sometimes  a  failure  in 
another  making  the  same  kind  of  shoes,  simply  because 
the  conditions  are  such  that  his  ideas  cannot  be  carried  to  a 
successful  conclusion. 

The  problem  of  managing  a  Sole  Leather  Department 
depends  largely  upon  the  kind  of  shoes  produced.  In 
making  some  classes  of  footwear,  it  is  more  advantageous 
to  purchase  the  material  all  cut;  in  others  it  is  practically 
impossible  to  buy  cut  stock.  This,  at  the  start,  requires 
radically  different  methods  of  procedure.  If  cut  soles  are 
used,  it  is  merely  necessary  to  get  them  in  shape  to  attach 
to  the  upper.  Of  course,  wasteful  methods  may  be  em- 
ployed in  such  instances,  and  the  elimination  of  this  waste 
depends  upon  the  information  with  which  the  foreman  and 
purchasing  agent  are  supplied  and  upon  their  ability  to 
handle  the  material  to  the  best  advantage. 

If  the  soles  are  cut  in  the  factory,  the  complication 
likely  to  arise  is  considerable.  One  sole  leather  man  will 
advocate  blocking  the  soles  with  a  die,  sorting  them  for 
quality  and  grading  for  thickness,  and  carrying  in  the  store 

169 


170     SHOE  MANUFACTURING  ORGANIZATION 

room  a  supply  of  cut  soles  from  which  to  meet  the  require- 
ments of  the  tags. 

Another  sole  leather  man  will  oppose  this  method,  and 
insist  that  the  only  proper  way  is  to  strip  the  sides,  rounding 
the  soles,  as  required,  from  these  strips.  The  success  of 
either  method  depends  almost  wholly  on  the  factory  con- 
ditions and  the  ability  of  the  man  in  charge  to  place  each 
part  of  the  side  where  it  belongs,  even  down  to  the  scraps. 
Most  men  have  no  scientific  basis  from  which  to  work. 

A  small  manufacturer,  making  a  limited  line  of  shoes, 
finds  it  difficult  to  cut  his  own  sole  leather  from  sides, 
because  he  has  no  place  to  use  the  offal  and  soles  not  of  the 
quality  he  requires. 

Theoretically,  at  least,  it  would  seem  as  though  soles 
can  be  produced  at  a  lower  cost  by  block  cutting  than  by 
stripping  and  rounding;  but,  when  we  consider  the  dis- 
advantages arising,  the  apparent  saving  does  not  always 
materialize.  The  other  method  would  apparently  mean 
a  higher  cost  sole,  but  it  also  means  no  surplus  stock,  and,  if 
cropped  leather  is  used,  very  little  offal  to  dispose  of.  Fre- 
quently costs  are  figured  incorrectly  and  manufacturers  are 
deceived  into  operating  under  wrong  methods  because  they 
are  misinformed. 

As  stated  above,  the  results  produced  depend  very 
largely  upon  the  man  in  charge,  but  whatever  his  method 
may  be,  it  must  harmonize  with  the  methods  employed  in 
the  rest  of  the  factory.  The  product  of  the  Sole  Leather 
Department  may  cause  an  endless  amount  of  trouble  in  the 
making  and  finishing  rooms.  Oftentimes  the  Sole  Leather 
Department  which  is  apparently  run  very  efficiently  causes 
serious  hindrances  and  losses  to  other  departments  before 
the  shoe  is  finally  completed  and  ready  to  ship. 

When  a  sole  leather  man  is  asked  his  reasons  for  manip- 


SHOE  MANUFACTURING  ORGANIZATION      171 

ulating  leather  by  the  method  which  he  employs,  he  can 
rarely  give  any  satisfactory  answer  or  figures  to  demon- 
strate that  his  method  is  the  correct  one.  A  man  of  ability 
in  this  line  should  not  only  demonstrate  with  figures  and  by 
tests  the  advantages  of  his  method,  but  he  should  just  as 
promptly  demonstrate  the  disadvantages  and  errors  of 
other  methods. 

In  the  majority  of  Sole  Leather  Departments  there  is  a 
continual  waste  of  material  and  labor,  because  of  the  lack  of 
absolute  standards  to  work  by,  which  are  nothing  more  than 
statistical  knowledge  of  the  possibilities  of  combining  sole 
leather  with  labor  in  the  process  of  manufacturing.  That 
it  is  not  impossible  to  have  such  figures  is  proved  by  the  fact 
that  there  are  some  sole  leather  men  who  show  positive 
figures  in  proof  of  their  contentions.  These  men  are  very 
valuable  and  command  big  salaries. 

A  great  many  factories  produce  the  fitted  bottom  stock 
long  before  it  is  ready  to  attach  to  the  upper.  Under  all 
ordinary  conditions  this  seems  to  be  a  very  serious  mistake, 
especially  in  making  McKay  sewed  shoes,  as  the  stock  must 
necessarily  become  dry  and  difficult  to  work,  and  each 
successive  wetting  deteriorates  the  quality  very  rapidly. 

Under  proper  conditions  —  which  can  be  brought  about 
in  any  factory  —  the  fitting  of  the  bottom  stock  should  not 
be  completed  very  long  before  the  time  for  attaching.  This 
insures  its  being  in  the  most  perfect  working  condition. 

The  method  of  obtaining  costs  in  the  Sole  Leather 
Department  is  comparatively  simple,  the  value  of  the  prod- 
uct being  dependent  upon  size,  quality  and  iron. 

Much  that  is  true  of  the  Upper  Leather  Department  is 
true  of  the  Sole  Leather  Department. 

A  bonus  for  saving  is  here  just  as  applicable  and  valu- 
able as  in  the  Upper  Leather  Department. 


172    SHOE  MANUFACTURING  ORGANIZATION 

Much  confusion  exists  in  the  minds  of  shoe  manu- 
facturers, cut  sole  manufacturers,  and  cost  men  over  the 
values  of  sole  leather.  It  generally  happens  that  a  concern, 
buying  sides  of  leather,  does  not  have  any  accurate  or  scien- 
tific method  of  establishing  the  values  of  the  various  parts  of 
the  sides. 

There  have  been  many  instances  where  profits  have  been 
made  in  cutting  certain  parts  of  the  side  of  leather,  and 
losses  made  on  certain  other  parts,  purely  by  placing  in- 
accurate arbitrary  values  thereon.  Shoe  manufacturers 
who  cut  their  own  soles  are  really  attempting  to  cut  soles  in 
competition  with  the  cut  sole  manufacturers.  They  claim 
that  they  can  produce  soles  cheaper  than  they  can  buy  them. 
In  many  cases,  they  are  deluding  themselves  into  the  belief 
that  they  are  doing  it  cheaper,  simply  because  they  do  not 
keep  correct  cost  accounts. 

The  shoe  manufacturer  who  cuts  soles  has  identically 
the  same  costs  as  the  cut  sole  manufacturer,  and  the  only 
figures  that  he  should  not  include  in  his  cost  which  the 
manufacturer  of  cut  soles  carries  are  Profits  and  Selling 
Expenses. 

It  is  fair  to  assume  that  the  cut  sole  manufacturer  has 
a  better  output  for  all  parts  of  a  side  than  the  shoe  manu- 
facturer. It  sometimes  happens,  however,  that  the  heel  or 
counter  manufacturer  who  buys  the  offal  from  the  sole 
cutter  makes  a  larger  percentage  of  profit  than  the  sole  cutter. 

It  seems  rather  unreasonable  to  expect  that  a  shoe 
manufacturer  can  buy  sides  of  leather  or  offal  to  so  much 
better  advantage  than  the  sole  cutter  or  the  heel  and  counter 
manufacturer,  that  he  can  cut  soles  and  make  heels,  counters, 
etc.,  cheaper  than  the  men  who  are  specializing  on  those 
parts  of  a  shoe.  The  evidence  which  has  been  accumulated 
from  time  to  time  proves  that  the  shoe  manufacturer  is 


SHOE  MANUFACTURING  ORGANIZATION     173 

wrong.  Unless  he  is  a  large  producer  he  cannot  compete 
with  them. 

Theoretically,  the  cut  sole  manufacturer  should  be  able 
to  supply  the  wants  of  all  shoe  manufacturers,  except 
possibly  the  largest,  but  in  practice  it  often  happens,  es- 
pecially with  the  shoe  manufacturers  who  are  using  hemlock 
soles,  that  they  cannot  buy  them,  and  are,  therefore,  forced 
to  cut  their  own. 

The  time  will  undoubtedly  come  when  a  tanner  will  take 
care  of  this  condition  by  retaining  all  the  profits  which  are 
to  be  gained  in  the  various  processes  of  cutting  up  and  selling 
a  side  of  leather. 

Theoretically,  again,  the  tanner  should  be  a  cut  sole 
manufacturer,  a  heel,  counter  and  lift  manufacturer,  and 
sell  all  of  his  hides  as  finished  product,  instead  of  selling 
them  whole. 

Sole  cutters  and  shoe  manufacturers  are  about  equally 
lacking  in  the  knowledge  of  the  relative  cost  of  producing 
a  certain  size,  iron  and  width  as  compared  with  certain  other 
sizes,  irons  and  widths.  Neither  do  they  know,  as  a  rule, 
the  difference  in  the  waste  of  one  die  as  compared  with 
another,  all  of  which  information  has  been  tabulated  and 
can  be  applied  to  any  case. 

In  publishing  the  chart  given  herewith,  any  analytical 
expert  must  bear  in  mind  that  it  is  an  arbitrary  cost  chart. 
This  chart  was  made  on  the  hypothesis  that  the  various 
portions  of  a  side  of  leather  are  worth  in  cents  per  pound 
the  values  as  given  in  the  diagram. 

For  practical  use  this  chart  is  not  sufficiently  accurate 
to  obtain  satisfactory  results,  and  is  shown  merely  as  an 
illustration  of  what  may  be  accomplished.  For  daily  use  it 
would  be  found  more  convenient  if  constructed  on  a  basis 
of  unity. 


174     SHOE  MANUFACTURING  ORGANIZATION 

Such  charts  can  be  constructed  for  each  sole  cutter  or 
shoe  manufacturer,  and  are  very  valuable. 


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NOTICE:  The  top  line  of  the  chart,  herewith,  is  the 
"L  &  S  Scale"  of  patterns  from  10  to  380  with  increases  of 
ten.  On  the  extreme  left  are  the  different  irons  from  1  to  14, 
inclusive. 

Opposite  each  of  the  irons  are  arbitrary  prices  per  pair 
in  cents  and  mills  for  that  iron  for  a  pattern  of  the  "scale" 
at  the  head  of  the  column.  To  get  the  scale  of  a  pattern  use 
the  L  &  S  Method.  Then  to  find  the  average  price  of  the 
soles,  etc.,  per  pair,  find  the  cost  of  the  part  of  the  side  from 
which  they  are  usually  cut.  For  instance,  a  good  sole  must 
be  cut  from  the  bend,  marked  30.  This  chart  is  the  "L  &  S 
Scale"  on  a  30-cent  value  for  the  bend;  therefore,  if  a  sole 
is  cut  from  the  bend  at  30  cents,  the  cost  of  a  pair  of  men's 
soles  scaling  320,  Iron  8,  is  205  (20|  cents).  The  value  of 
insoles,  taps,  counters,  top  pieces,  etc.,  may  be  readily 
ascertained. 


CHAPTER  18 
MAKING  DEPARTMENT 

THE  Making  Department  includes  everything  except 
the  Cutting  and  Sole  Leather  Departments.    While 
these  two  departments  can  be  run  in  poorly  con- 
structed factories  and  a  fair  degree  of  speed  maintained,  it 
is  impossible  in  the  making  rooms  to  get  the  best  speed 
unless  the  construction  is  good.     Although    every  manu- 
facturer is  striving  for  speed,  and  still  more  speed,  there  are 
very  few  who  are  getting  the  maximum  amount. 

The  Upper  Leather  and  Sole  Cutting  Departments  may 
be  filled  up  with  tags  or  tickets,  large  quantities  of  uppers 
may  be  cut  and  many  soles  produced,  but  a  big  volume  of 
shoes  cannot  be  manufactured  unless  the  Making  Depart- 
ment is  so  arranged  that  it  can  take  care  of  these  uppers  and 
soles.  Manufacturers  are  often  heard  to  complain  that  they 
cannot  get  shoes  through  the  stitching  room,  that  they  are 
tied  up  in  the  Lasting  Department,  that  the  heeler  is  blocked 
or  that  the  edge  trimmers  are  behind  time,  etc.  Nine  times 
out  of  ten  an  investigation  shows  that  the  trouble  is  the 
same  as  would  befall  a  ship  if  the  captain  were  without  a 
compass  or  rudder.  Many  manufacturers  attempt  to  run 
this  department  without  a  sheet  system,  or  with  a  very 
inferior  or  indifferent  one,  with  no  systematic  or  carefully 
compiled  office  records  to  show  what  are  the  capacities  of 
the  various  departments.  The  result  is  that  some  one  is 

177 


178     SHOE  MANUFACTURING  ORGANIZATION 

always  chafing  because  it  is  impossible  to  get  work  through 
on  time,  and  the  help  are  dissatisfied  because  they  do  not 
get  the  work  that  they  should  have  in  order  to  earn  the  pay 
they  are  entitled  to  earn.  A  factory  running  under  these 
conditions  is  like  a  large  bottle  with  a  small  neck.  Fill  it 
full  of  water  and  then  attempt  to  empty  it  quickly.  You 
will  find  that  you  can  never  get  more  water  out  of  the  bottle 
than  will  pass  through  the  neck.  Tip  the  bottle  bottom  up 
or  shake  it,  but  what  do  you  get?  More  noise  and  gurgle, 
but  less  water. 

The  same  thing  is  applicable  to  the  shoe  factory.  Pour- 
ing seven  thousand  pairs  of  uppers  per  day  into  the  stitching 
room  when  that  department  is  only  equipped  to  turn  out 
forty-five  hundred  pairs,  or  pouring  forty -five  hundred  pairs 
per  day  into  the  lasting  room  when  that  department  is 
short  of  lasts,  and  then  attempting  to  rush  some  shoes, 
brings  about  the  same  result  as  described  above. 

The  Heeling  Department  cannot  take  care  of  as  many 
shoes  if  all  shapes  and  heights  of  heels  come  along  indis- 
criminately, as  often  happens.  If  the  edge-makers  are 
obliged  to  change  their  machines  very  frequently,  it  is 
impossible  to  get  up  speed  at  this  point. 

Years  ago  a  certain  patriot  said  that  "eternal  vigilance 
is  the  price  of  liberty."  The  price  of  a  well-organized 
Making  Department  is  also  eternal  vigilance,  but  it  is  abso- 
lutely necessary  that  that  vigilance  be  helped  out  with 
system.  The  barometer  must  be  properly  adjusted  and  the 
chronometer  set  to  run  accurately  or  the  work  will  not  go 
through  without  unnecessary  delays.  Think  of  a  system 
where  a  factory  superintendent  gets  a  production  sheet 
sixty  days  ahead  of  the  day  he  is  to  start  making  the  shoes, 
showing  him  exactly  what  complications  he  is  to  have  and 
just  what  he  must  do  to  have  these  shoes  at  certain  points 


SHOE  MANUFACTURING  ORGANIZATION     179 

in  his  factory  at  the  day  and  hour  they  are  required  at  those 
points,  and  some  realization  may  be  had  as  to  why  it  requires 
only  eight  or  ten  square  feet  for  each  pair  of  shoes.  Com- 
pare that  with  the  conditions  in  other  factories  using  thirty, 
forty  and  even  sixty  square  feet  to  a  pair  of  shoes.  Is  it 
to  be  wondered  at  that  many  manufacturers  are  finding  it 
more  and  more  difficult  to  do  business?  Some  manufac- 
turers are  afraid  of  a  "Trust  in  Shoes."  If  a  "Trust" 
decides  to  manufacture  shoes,  it  will  have  the  necessary 
system  for  economic  production  at  every  point,  but 
the  office  will  not  be  the  point  where  it  will 
begin  to  do  foolish  economizing.  The  "Shoe  Trust" 
manufacturing  office  will  compare  with  the  ocean  liner's 
pilot-house,  and  be  equipped  scientifically  to  determine 
where  the  business  ship  is.  If  we  should  put  one  of  our  old- 
fashioned  shoe  manufacturers  into  such  an  office,  he  would 
be  just  as  much  out  of  place  as  an  old-time  sailing  captain 
would  be  on  the  bridge  of  a  modern  ocean  liner.  This, 
however,  is  the  manner  in  which  shoe  factories  of  the  future 
will  be  managed. 

The  only  successful  method  of  running  the  Making 
Department  of  a  modern  shoe  factory  is  under  the  system 
known  as  the  Production  or  Sheet  System.  There  are  a 
multitude  of  advantages  in  this  system,  which  in  application 
mean  that  the  administrators  and  executives  are  in  control. 
A  great  many  manufacturers  have  failed  in  the  attempt  to 
install  and  use  the  sheet  system.  Whenever  they  have 
failed,  it  has  been  their  own  fault.  There  have  been  many 
instances  of  failure  solely  because  they  refused  to  properly 
install  the  system  and  keep  the  necessary  records  of  the 
capacity  at  each  important  point  in  the  factory. 

The  system  will  not  operate  itself.  Some  factories 
making  the  most  complicated  lines  have  made  a  great  sue- 


180    SHOE  MANUFACTURING  ORGANIZATION 

cess,  largely  increasing  their  output,  and  making  their 
employees  better  satisfied,  by  having  a  full  day's  work  each 
day,  instead  of  being  driven  to  death  one  day  and  having 
half  enough  work  the  next.  The  system  can  be  made  a 
success  in  any  well-organized  factory  if  the  management 
wants  to  see  that  the  money  invested  in  the  office  is  saved 
in  the  factory  by  eliminating  Non-Productive  Labor  and 
by  producing  a  greater  volume  of  shoes. 

After  the  Production  System  was  thoroughly  installed  in 
one  factory,  the  productive  capacity  of  the  plant  was  in- 
creased 30%,  and  the  time  of  putting  shoes  through  reduced 
from  an  average  of  five  or  six  weeks  to  three  weeks. 

Every  room  must  be  so  arranged  that  work  will  rotate 
rapidly  and  without  blocks  or  delays. 

The  line-up  of  machines  can  only  be  arranged  after  con- 
sidering the  kind  of  shoes  to  be  made. 

The  system  used  must  be  one  that  eliminates  Non- 
Productive  labor,  waste  time,  and  waste  space. 


CHAPTER  19 

CUTTING  EFFICIENCY 
BY  CHARLES  H.  NICHOLS 

THE  word  "efficient"  means  the  accomplishment  of  a 
fixed  purpose.  Consequently,  the  efficiency  which 
is  produced  depends  upon  the  given  fixed  purpose. 

In  discussing  efficiency  in  the  cutting  room,  we  must 
necessarily  consider  the  efficiency  of  three  distinct  things: 

First,  the  efficiency  of  material. 

Second,  the  efficiency  of  labor. 

Third,  the  efficiency  of  expense. 

I  shall  not  touch  upon  the  efficiency  of  the  latter,  ex- 
cept to  call  attention  to  the  fact  that  expenses  are  to  some 
extent  incurred  through  the  cost  of  equipment  and  that  the 
greater  facilities  this  equipment  affords,  the  less  will  be  the 
expense.  Also  that  with  a  given  expense  the  greater  the 
production,  the  more  efficient  will  be  the  expense  burden. 

The  efficiency  of  material  and  labor  are  so  closely  related 
to  each  other  that  I  shall  not  attempt  to  make  a  thorough 
separation  of  the  two,  but  consider  them  to  a  greater  or  less 
extent  together. 

In  order  to  consider  clearly  the  efficiency  of  material 
and  labor,  we  must  first  fix  in  our  minds  the  proportionate 
cost  of  each;  or  to  put  it  another  way,  the  per  cent  that  the 
cost  of  labor  is  of  the  cost  of  material. 

As  an  illustration,  I  am  going  to  consider  for  a  moment 

181 


182     SHOE  MANUFACTURING  ORGANIZATION 

the  manufacture  of  men's  and  women's  shoes,  without 
touching  upon  misses',  children's,  boys',  youths',  etc.,  but 
whatever  facts  we  find  about  men's  and  women's  will  be 
true  in  proportion  about  other  shoes. 

Of  course,  you  realize  that  conditions  in  various  fac- 
tories differ  widely.  Consequently,  I  shall  take  a  general 
average,  rather  than  the  specific  conditions  found  in  any  one 
factory.  Also  I  shall  consider  only  the  cutting  of  the 
outsides. 

The  average  cost  of  the  upper  stock  in  a  man's  or  woman's 
shoe  is  in  the  neighborhood  of  60  cents  per  pair,  this  figure 
being  high  for  some  instances  and  low  for  others. 

The  average  cost  of  cutting  the  outside  of  the  shoe  is 
about  three  cents  per  pair,  this  figure  being  high  for  some 
instances  and  low  for  others.  The  labor  cost  of  cutting 
outsides  will  vary  from  a  little  over  a  cent  to  in  some  in- 
stances 5  or  6  cents  per  pair. 

With  a  material  cost  of  60  cents  and  a  labor  cost  of  3 
cents  per  pair,  we  find  that  the  labor  is  only  5%  of  the 
material. 

There  is  hardly  a  manufacturer  who  would  not  accept 
an  opportunity  of  making  a  saving  of  10%  of  the  labor 
cost  of  cutting  the  outsides  of  his  shoes.  In  the  given  illus- 
tration, a  saving  of  10%  means  a  saving  of  three-tenths  of 
a  cent  per  pair.  In  a  factory  producing  3,000  pairs  of  shoes 
daily,  this  amounts  to  $9.00  per  day,  and  for  a  period  of  300 
days,  $2,700,  not  a  very  large  item. 

Suppose  we  could  effect  a  saving  of  10%  in  material. 
This  would  amount  to  6  cents  per  pair,  which  with  a  pro- 
duction of  3,000  pairs  per  day,  means  a  saving  of  $180  per 
day,  or  for  300  days  a  saving  of  $54,000,  twenty  times  the 
saving  of  10%  in  labor  or  200%  of  the  total  labor  cost. 

It  will  undoubtedly  be  claimed  that  such  a  saving  on 


SHOE  MANUFACTURING  ORGANIZATION      183 

material  is  impossible,  and  it  undoubtedly  is  in  many  in- 
stances. However,  it  has  been  and  is  being  made  right 
along. 

Now  what  saving  is  necessary  to  equal  the  10%  in 
labor?  Only  one-half  of  one  per  cent.  In  other  words, 
every  three  mills  saved  in  the  material  of  a  pair  of  shoes 
equals  10%  of  the  labor  cost.  Probably  no  one  will  deny 
that  it  is  possible  to  make  a  saving  of  one-half  of  one  per  cent 
in  material.  It  is,  in  fact,  possible  in  any  instance  to  save 
from  one  to  five  per  cent.  Suppose  the  saving  is  3%. 
What  does  it  mean?  It  means  just  six  times  as  much  as  a 
saving  of  10%  in  labor  or  on  a  production  of  3,000  pairs  per 
day,  a  daily  saving  of  $54  or  $16,200  per  annum.  Surely  a 
considerable  amount. 

What  is  necessary  to  reach  a  reasonable  degree  of  effi- 
ciency? From  the  meaning  of  the  word  "efficiency,"  we 
find  that  the  first  necessity  is  a  fixed  purpose.  In  other 
words,  we  must  have  a  fixed  task.  Otherwise  we  can  have 
no  idea  what  degree  of  efficiency  is  being  reached.  Now  the 
cutting  of  the  shoe  involves  the  use  of  both  material  and 
labor.  We  must,  therefore,  have  the  task  include  both 
material  and  labor,  and  the  labor  task  must  further  be  di- 
vided into  the  quantity  of  production  and  the  quality  of 
production. 

In  solving  this  problem  of  efficiency  of  material  and 
labor,  we  find  that  we  have  three  important  factors. 

First,  we  have  a  material  which  is  constantly  varying 
in  intrinsic  value;  that  is,  in  value  for  the  production  of  shoes. 
The  material  may  all  cost  the  same  but  because  of  some 
peculiarities  it  is  not  all  worth  the  same  for  manufacturing 
purposes. 

Second,  we  are  cutting  that  leather  into  pieces  of  various 
shapes  and  sizes  of  which  comparatively  few  have  the  same 


184  SHOE  MANUFACTURING  ORGANIZATION 

value.  That  is,  patterns  of  more  than  one  shape  and  size 
are  ordinarily  used  in  cutting  one  job. 

Third,  we  have  the  variation  in  the  skill  and  speed  of 
the  labor  used  in  the  cutting. 

In  making  a  beginning  of  efficiency  records,  these  three 
factors  are  of  unknown  value,  and  we  must  find  what  the 
values  are.  Only  one  of  the  three  factors  remains  constant. 
That  is  the  patterns.  While  these  patterns  vary  in  shape  and 
in  size,  the  given  shape  or  size  always  remains  the  same,  and, 
therefore,  has  a  constant  value. 

There  have  been  various  means  devised  for  ascertaining 
the  value  of  different  shapes  of  patterns.  In  the  vast 
majority  of  instances  these  values  are  ascertained  either  by 
guess,  by  experiment  or  by  some  more  or  less  crude  method, 
such  as  marking  them  out  on  paper,  Sometimes  the  area 
is  found  either  by  means  of  a  planimeter  or  cross-section 
paper  or  weight. 

It  can  easily  be  demonstrated  that  the  area  of  a  pattern 
has  relatively  little  to  do  with  its  cutting  value.  In  other 
words,  patterns  having  the  same  identical  area  will  vary 
tremendously  in  the  amount  of  leather  required  to  cut  them. 
This  method  must  then  be  eliminated  from  consideration. 

Neither  can  we  determine  its  value  by  such  an  ex- 
periment as  a  test  cutting,  because  a  test  cutting  involves 
the  factors  just  mentioned,  and  the  value  of  none  of  them 
is  known. 

It  is  evidently  impossible  to  ascertain  the  cutting  value 
of  a  pattern  by  merely  looking  at  it  and  the  old  method 
of  marking  it  out  on  a  piece  of  paper  is  not  sufficiently 
accurate,  because  given  the  same  pattern,  different  people 
will  determine  different  values,  and  we  must  have  a  method 
by  which  any  number  of  different  people  will  at  all  times 
arrive  at  the  same  value.  Such  a  method  I  have  devised, 


SHOE  MANUFACTURING  ORGANIZATION   185 

but  a  demonstration  of  it  would  require  considerably  more 
time  than  is  at  my  disposal,  and  a  comprehension  of  its 
accuracy  necessitates  a  knowledge  of  higher  mathematics. 
The  application,  however,  requires  only  a  knowledge  of 
grammar  school  arithmetic. 

The  values  of  different  sizes  of  the  same  shaped  pattern 
have  been  calculated  in  a  large  number  of  different  ways, 
usually  by  making  an  arbitrary  grade.  That  is,  the  value 
of  one  certain  size  is  always  considered  a  fixed  per  cent  of 
another  certain  size,  this  value  remaining  the  same  regardless 
of  the  shape  of  the  pattern.  It  can  easily  be  demonstrated 
that  such  an  assigned  value  may  be  and  usually  is  far  from 
accurate.  Now  it  is  evident  that  if  we  can  determine  the 
values  of  different  shapes  of  patterns,  we  can  just  as  easily 
determine  the  values  of  different  sizes  of  the  same  pattern. 
We  can,  therefore,  set  absolute  fixed  values  upon  the  patterns 
themselves.  This  eliminates  one  of  our  variables. 

Before  we  can  take  up  the  question  of  labor,  we  must 
settle  upon  the  method  of  handling  material. 

The  value  of  this  material  as  purchased  varies  con- 
stantly and  until  the  time  arrives  when  skins  can  be  grown 
and  tanned  to  fixed  standards  and  the  measurement  of 
leather  is  more  exact  than  at  present,  it  will  be  impossible 
to  absolutely  standardize  the  exact  amount  of  material 
necessary  to  produce  shoes.  We  can,  however,  very  easily 
make  standards  for  the  use  of  leathers.  That  is,  we  can 
make  selections  of  various  kinds,  types  and  qualities  of  skins 
best  suited  to  produce  certain  styles  and  qualities  of  shoes. 
Then  by  the  law  of  error,  the  slight  positive  and  negative 
variations  from  these  standards  will  tend  to  neutralize  each 
other,  and  we  have  for  practical  purposes  a  very  acceptably 
standardized  material.  When  this  is  done,  we  have  solved 
two  of  our  factors;  namely,  the  patterns  and  the  material. 


186     SHOE  MANUFACTURING  ORGANIZATION 

The  relationship  between  these  two  factors  can  be 
calculated,  thus  finding  the  minimum  amount  of  a  given 
material  necessary  to  produce  shoes  of  a  given  quality, 
style  and  sizes  being  considered. 

In  this  way  we  eliminated  one  of  the  uncertainties  of 
labor;  namely,  the  amount  of  material  which  it  should 
consume  in  producing  shoes. 

The  speed  with  which  labor  should  produce  shoes  de- 
pends principally  upon  three  factors:  The  shapes  of  the 
patterns  used,  the  materials  used  and  the  judgment  and 
quickness  of  the  cutter.  These  factors  can  only  be  deter- 
mined by  intelligent  time  study.  But  they  can  be  de- 
termined, and  when  done  we  have  reduced  to  mathematical 
formulae  the  entire  process  of  cutting  shoes.  In  other  words, 
we  have  placed  ourselves  in  a  position  to  assign  the  necessary 
task  to  get  efficiency.  It  will,  undoubtedly,  at  first  appear 
that  this  process  is  long  and  complicated.  However,  it  is 
not  and  is,  in  fact,  done  more  or  less  thoroughly  in  every 
factory.  The  reason  why  a  fair  degree  of  perfection  is  not 
reached  is  because  the  principles  of  Scientific  Management 
are  not  used. 

The  whole  proposition  may  be  summed  up  very  quickly 
in  the  proper  sorting  and  grading  of  material  to  meet  the 
requirements  of  manufacture,  the  assigning  of  correct 
values  to  the  different  sizes  and  shapes  of  patterns  and  time 
studies  showing  the  amount  of  labor  necessary  to  cut  shoes. 

It  has  been  the  general  tendency  in  the  past  to  make 
economies  in  the  cutting  room,  either  through  a  reduction 
in  the  price  paid  labor  or  through  a  reduction  in  the  quality 
of  the  shoes  produced,  neither  of  which  in  the  long  run  gives 
satisfactory  results.  The  saving  which  can  be  made  in  labor 
through  a  reduction  of  price  cannot  be  very  much,  while  the 
saving  to  be  made  in  the  consumption  of  material  without  a 


SHOE  MANUFACTURING  ORGANIZATION     187 

reduction  in  the  quality  of  shoes  is  a  large  amount.  It 
would,  therefore,  seem  logical  to  spend  much  more  time  and 
thought  on  the  latter  than  on  the  former. 

We  have,  however,  to  use  labor  in  the  consumption  of 
material,  and  it  is  necessary  to  render  that  labor  efficient, 
else  our  material  cannot  be  efficiently  consumed. 

A  little  consideration  will  prove  that  it  is  very  difficult 
to  accomplish  anything  unless  there  is  some  suitable  reward 
for  the  accomplishment.  In  the  case  of  the  employer,  the 
reward  for  his  work  is  the  profit  of  his  business;  in  the  case 
of  the  employee,  it  is  the  amount  of  money  which  he  can 
earn.  We  must,  therefore,  to  get  the  best  results,  offer  to  the 
workman  a  reward  sufficient  to  induce  him  to  make  the 
exertion  necessary  to  accomplish  the  fixed  task  which  means 
efficiency.  What  this  reward  should  be  varies,  of  course, 
in  different  grades  of  work,  and  in  different  localities;  but 
in  any  event,  if  we  wish  to  increase  the  efficiency  of  labor  to 
any  great  extent,  we  must  offer  it  a  just  reward  for  its  efforts. 

At  the  present  time  the  tendency  of  organized  labor 
is  to  limit  the  daily  production  of  each  cutter.  This  ten- 
dency has  come  about  for  a  number  of  reasons,  the  principal 
ones  being  bad  management  and  unsteady  employment. 

The  claim  is  often  presented  that  a  cutter  can  work  to 
advantage  not  more  than  eight  hours  per  day,  it  being 
asserted  that  in  the  latter  part  of  the  day,  especially  in  the 
winter  time,  it  is  impossible  for  a  cutter  to  perform  his  work 
either  well  or  rapidly.  That  this  assertion  is  true,  is,  I  am 
sorry  to  say,  altogether  too  frequently  the  case. 

In  a  great  many  factories  after  it  is  too  late  to  work  by 
natural  light,  the  cutting  room  is  as  a  whole  dark  and 
gloomy.  The  cutters  are  usually  provided  with  either  an 
open  flame  gas  jet  or  an  unsuitable  electric  light,  which  at 
best  illuminates  only  a  small  area  of  his  work  bench,  fre- 


188  SHOE  MANUFACTURING  ORGANIZATION 

quently  shining  directly  in  his  eyes,  making  it  very  difficult 
for  him  to  see.  In  many  such  factories,  we  find  the  cutter 
rushing  his  work  during  eight  hours  of  the  day,  and  during 
the  last  hour  or  two  either  killing  time  or  doing  some  un- 
important job.  In  such  instances  as  he  is  required  to  work 
as  hard  as  possible  up  to  closing  time,  we  find  that  his  pro- 
duction will  drop  from  twenty  to  fifty  per  cent  in  speed, 
and  fully  that  much  in  quality.  Such  conditions  are  wholly 
inefficient  and  entirely  unnecessary.  A  very  slight  addi- 
tional expenditure,  usually  not  to  exceed  one  half  cent  per 
cutter  per  hour,  approximately  the  cost  of  cutting  one-sixth 
of  a  pair  of  shoes,  will  provide  illumination  nearly  equal  to 
natural  light,  increasing  the  efficiency  of  labor  to  a  very 
considerable  extent.  Each  cutter  has  to  produce  only  one 
extra  pair  of  shoes  to  earn  five  or  six  hundred  per  cent  on  the 
increased  cost  of  illumination. 

Unsteady  employment  has  been  one  of  the  chief  reasons 
for  limiting  the  daily  production  of  cutters.  It  is  not  always 
possible  to  run  a  shoe  factory  so  as  to  produce  the  same 
number  of  pairs  of  shoes  per  day  throughout  an  entire  year, 
but  that  this  can  be  more  nearly  approached  than 
it  is  in  the  majority  of  cases  is  an  easily  demonstrated 
fact. 

It  is  the  tendency  in  altogether  too  many  factories  to 
run  the  cutting  room  at  full  speed  during  about  eight 
months  of  the  year,  and  the  packing  room  eleven  or  twelve. 
This  means  that  the  daily  production  of  the  cutting  room 
while  it  is  running  is  greater  than  the  daily  production  of  the 
other  departments.  It  does  not  mean  that  the  factory  as  a 
whole  produces  any  more  shoes  than  it  would  if  the  cutting 
room  produced  at  the  same  rate  as  other  departments.  It 
also  means  that  with  a  given  daily  production  per  cutter  it 
requires  the  employment  of  more  cutters  than  would  other- 


SHOE  MANUFACTURING  ORGANIZATION   189 

wise  be  necessary,  which  in  turn  means  that  these  same  cut- 
ters or  a  portion  of  them  must  loaf  during  part  of  the  year. 

I  have  observed  in  a  great  many  instances  that  in  locali- 
ties where  this  custom  prevailed,  the  cutters  as  a  rule  earn 
while  working  from  thirty-five  to  fifty  per  cent  more  per 
day  than  they  do  in  localities  where  conditions  of  steady  em- 
ployment prevail.  This  in  itself  means  an  abnormally  high 
cost  of  labor.  It  also  means  an  abnormally  high  cost  of 
material,  for  to  get  the  greatest  efficiency  out  of  the  average 
cutter,  he  needs  a  considerable  period  of  careful  training. 
Under  the  short  employment  method  he  can  only  have 
reached  the  state  where  he  has  become  efficient  when  his 
job  gives  out,  and  we  have  virtually  thrown  away  all  our 
efforts,  in  addition  to  making  the  cutter  dissatisfied  with 
his  lot.  Moreover,  instead  of  increasing  the  promptness  of 
shipments,  the  result  is  invariably  the  opposite,  there  being  a 
congestion  in  all  departments,  reducing  the  efficiency  of 
labor  and  machinery,  delaying  shipments.  The  manu- 
facturer not  only  suffers  loss  of  efficiency  in  cutting,  but 
increases  the  cost  in  all  departments,  adds  largely  to  his 
interest  charges  and  in  the  end  disappoints  and  perhaps 
loses  his  customer. 

The  best  method  of  rewarding  cutters  for  their  labors 
has  been  a  much  discussed  problem.  Some  manufacturers 
pay  their  cutters  by  the  piece  in  order  to  keep  their  labor 
cost  at  a  minimum.  Other  manufacturers  pay  by  the  day, 
claiming  that  they  can  save  more  than  enough  material  to 
offset  the  increase  in  labor.  Other  manufacturers  oscillate 
from  one  method  of  payment  to  the  other. 

Inasmuch  as  the  cost  of  labor  is  such  a  small  per  cent 
of  the  cost  of  material,  it  would  seem  that  this  fact  should 
be  the  first  consideration  in  rewarding  cutters,  but  as  a 
matter  of  fact  it  has  been  considered  in  very  few  instances. 


190    SHOE  MANUFACTURING  ORGANIZATION 

It  is  evidently  impossible  to  gain  the  greatest  efficiency 
under  a  piece  price  system  unless  the  allowances  for  material 
have  been  reduced  to  the  lowest  practical  point,  and  cutters 
are  required  to  produce  shoes  for  these  allowances.  It  must 
also  be  necessary  that  the  production  of  the  cutter  be  as  great 
as  possible  compatible  with  the  quality  of  his  work  in  order 
that  the  cost  of  production  may  come  within  reasonable 
limits,  which  we  have  seen  is  contrary  to  the  tendency  of  the 
present  time. 

It  is  evidently  impossible  to  reach  the  greatest  efficiency 
with  day  labor  unless  the  cutter  produces  the  maximum 
amount  of  shoes  and  they  must  also  be  produced  out  of  the 
least  possible  amount  of  material  so  that  with  either  day  or 
piece  labor  the  results  should  be  the  same. 

Under  the  piece  price  plan,  the  chief  reward  is  for  speed, 
under  the  day  labor  plan  the  chief  reward  is  for  keeping 
down  the  cost  of  material.  Under  neither  plan  is  the  cutter 
rewarded  for  keeping  down  the  cost  of  both  material  and 
labor. 

A  logical  plan  is  that  the  reward  be  based  upon  both  speed 
and  consumption  of  material  or  a  bonus  system. 

Attempts  to  do  this  have  been  spasmodically  made  from 
time  to  time,  but  in  no  instance,  that  has  come  to  my  at- 
tention, have  the  results  been  satisfactory  over  any  very 
long  period  of  time.  Either  the  reward  for  speed  was  out  of 
proportion  to  the  reward  for  material,  or  vice  versa.  In 
many  instances,  the  reward  for  either  one  or  the  other  has 
been  paid  at  such  remote  times  that  it  offered  little  induce- 
ment to  the  cutter.  It  is  more  satisfactory  to  pay  any  re- 
wards which  may  be  earned  either  for  speed  or  saving  in 
material  at  certain  definite  periods,  and  these  periods  of  pay- 
ment should  be  frequent,  preferably  weekly.  It  has  been 
found  that  better  results  can  be  obtained  if  the  cutter  is  in- 


SHOE  MANUFACTURING  ORGANIZATION     191 

formed  immediately  after  the  completion  of  each  job  whether 
or  not  he  has  earned  his  bonus. 

To  fix  the  reward  satisfactorily  then,  requires  that  three 
things  be  arranged. 

First,  the  correct  amount  of  material  to  be  used. 

Second,  the  correct  amount  of  time  to  cut  the  material. 

Third,  the  correct  amount  of  reward  to  give  the  cutter 
for  his  efficient  help  in  saving  both  material  and  labor. 

NOTE:  Since  this  speech  was  delivered  one  manufac- 
turer at  least  has  adopted  the  advice  given,  and  is  now 
saving  10%  on  the  cost  of  his  leather. 


CHAPTER  20 

UNIT  AREA  OF  PRODUCTION 

BY  JOHN  E.  KIRWIN 
Published  by  Small,  Nichols  &  Co.,  Inc.,  in  1910 

SHOE  manufacturers  sometimes  are  at  a  loss  to  know 
whether  or  not  they  are  making  the  best  possible 
use  of  the  floor  space  at  their  disposal.  Careful 
investigations  are  made  and  the  untiring  efforts  of  the  super- 
intendent are  enlisted.  Frequently  the  concerns  in  doubt 
go  outside  and  employ  the  services  of  men  whose  business 
it  is  to  study,  devise  and  improve  systems  with  an  eye  to 
greater  productiveness.  This  latter  course  is  a  very  prof- 
itable investment,  providing  the  men  engaged  are  thor- 
oughly conversant  with  the  peculiar  problem  of  producing 
shoes. 

It  is  very  natural  that  shoe  manufacturers  should  want 
to  know  exactly  where  they  stand,  inasmuch  as  competition 
is  extremely  keen,  and  the  margin  of  profit  small.  The  race 
is,  indeed,  for  the  sure-footed  no  less  than  for  the  fleet- 
footed.  A  few  suggestions  may  clear  the  situation.  For 
instance,  a  manufacturer  may  perceive  in  advance  that  the 
price  of  materials  is  going  to  rise,  and  in  this  case  he  is  con- 
fronted with  the  problem  of  "stocking  up."  Now,  unless 
he  knows  down  to  a  cent  what  it  costs  him  to  make  his  prod- 
uct, and  unless  he  is  informed  down  to  a  square  foot  as  to 

193 


194     SHOE  MANUFACTURING  ORGANIZATION 

how  much  room  it  requires  to  move  the  work  through  to 
completion,  he  cannot  wisely  venture  into  the  market  and 
place  heavy  orders  with  a  feeling  of  clear  confidence.  Lack- 
ing such  precise  knowledge  of  his  own  business,  he  falls  into 
the  habit  of  waiting  and  considering,  with  the  result  later 
of  buying  materials  at  advanced  cost.  Many  manufacturers 
take  long  chances,  and  they  stand  to  win  or  lose,  but  those 
best  equipped  with  a  precise  conception  of  their  productive 
capacity,  and  the  cost  per  unit  of  product,  are  the  men  who 
seize  opportunities  at  the  right  time  and  then  push  their 
competitors.  It  is  well  known  that  some  men  are  classed 
as  conservative  who  are  prevented  from  acting  because  of  a 
lack  of  complete  understanding  of  their  own  working  organi- 
zation. Others  are  stigmatized  as  adventurers,  who  merely 
act  quickly  and  decisively  because  of  well-placed  confidence 
in  the  efficiency  of  their  productive  power. 

The  point  which  is  being  driven  home  is  that  too  few 
manufacturers  know  within  a  row  of  apple  trees  just  how 
much  floor  space  it  takes  to  turn  out  a  unit  of  their  product, 
which  is  a  pair  of  shoes.  This  is  one  of  the  units  of  produc- 
tive efficiency  which  should  be  ascertained  exactly. 

The  point  just  made  involves  a  good  deal.  It  compre- 
hends all  the  parts  of  the  factory,  department  by  depart- 
ment, and  their  correlation.  Much  depends  on  the  physical 
structure  of  the  factory,  in  attaining  the  greatest  depart- 
mental efficiency,  or,  in  other  words,  an  arrangement  which 
might  be  admirably  adapted  to  one  shoe  manufacturing 
plant  would  be  the  worst  possible  arrangement  in  another. 
It  is,  therefore,  necessary  for  each  plant  to  line  up  its  forces 
to  the  highest  productive  advantage.  Some  observations 
on  how  certain  factories  are  arranged  may  clarify  these 
claims. 

More  and  more  the  belief  is  gaining  ground  that  the 


SHOE  MANUFACTURING  ORGANIZATION  195 

cutting  of  the  upper  leather  and  sole  leather  should  not  be  a 
working  part  of  the  factory  proper.  Hence,  we  note  that 
some  large  firms  are  segregating  the  cutting  unit  from  the 
organization  proper.  At  present  this  arrangement  seems  to 
apply  chiefly  to  concerns  engaged  on  a  large  scale.  The 
whole  idea  back  of  it  is,  of  course,  that  so  much  money  may 
be  either  made  or  lost  in  the  cutting  up  of  the  leather  that 
it  should  be  made  a  separate  department  from  all  the  rest  of 
the  factory.  In  other  words,  the  leather  should  be  received, 
checked,  sorted  and  cut,  and  then  be  sold  to  the  factory 
proper,  just  as  though  it  were  a  purchase  made  outside. 
Needless  to  say,  an  unmistakable  double  check  is  hereby 
afforded  on  the  most  expensive  material  used  in  the  process 
of  shoe  manufacturing. 

In  some  factories  that  are  built  suitably  it  is  found  con- 
venient to  have  the  cutting  and  fitting  departments  on  the 
same  floor.  Wherever  this  is  in  vogue  it  is  noted  that  many 
of  the  operations  usually  done  in  the  stitching  room  are 
transferred  to  the  cutting  room.  Such  operations  as 
skiving,  cementing,  folding,  lining  and  upper  marking  — 
which  are  preliminary  factors  in  the  work  —  are  found  to 
facilitate  greatly  the  fast  rotating  of  the  shoes  through  the 
stitching  room,  if  they  are  done  in  the  cutting  room.  In- 
vestigations show  that  in  many  instances,  where  shoes  are 
held  up  in  the  stitching  room,  the  delay  is  to  be  traced  to  one 
or  the  other  of  the  preliminary  operations.  When  work  is 
once  well  started  in  this  department  there  is  little  fear  of  it 
being  held  up. 

To  carry  the  observations  further,  it  is  found  that 
greater  efficiency  is  often  gained  by  having  the  making  and 
the  finishing  departments  on  the  same  floor.  Where  such 
an  arrangement  obtains,  poor  edges  or  poor  work  of  any 
sort  may  be  pushed  back  quickly  to  the  department  from 


196  SHOE  MANUFACTURING  ORGANIZATION 

which  it  just  issued,  without,  it  must  be  noted,  the  necessity 
of  transferring  on  the  elevator.  Applying  the  same  prin- 
ciple, an  arrangement  which  provides  for  the  lasting  and 
stock-fitting  departments  on  the  same  floor  may  be  defended 
on  the  grounds  of  greater  productive  efficiency. 

It  is  not  deemed  practical  to  go  too  much  into  specific 
details  as  this  discussion  is  merely  intended  to  furnish  food 
for  thought  and  to  call  attention  to  the  fact  that  shoe  manu- 
facturers are  in  a  position  which  demands  the  acquisition  of 
every  bit  of  detailed  knowledge  relating  to  their  individual 
plants  which  it  is  possible  for  them  to  secure.  The  reason 
for  this  is,  as  we  have  pointed  out,  because  the  competition 
is  becoming  so  great  and  because  the  net  profits  are  being 
shaved  so  closely.  It  should  be  further  stated  that  small 
factories  are  undeniably  on  the  decrease,  and  there  must  be 
a  good  reason  back  of  it. 


CHAPTER  21 
SOME  PRINTED  FORMS 

IN  writing  the  preceding  chapters,  the  author  has  held 
to  the  idea,  which  he  stated  in  Chapter  1  he  desired  to 
present  to  his  readers :  namely,  to  write  a  text-book  by 
which  a  manufacturer  could  work  out  his  own  problems. 
Therefore,  very  few  printed  forms  were  included,  in  fact, 
only  those  which  were  necessary  to  illustrate  the  points 
described. 

Friends  who  have  read  the  manuscript  suggested  that  it 
would  add  to  the  value  of  the  book  to  some  readers  if  more 
specific  forms  were  shown;  hence,  the  following  pages. 

Please  bear  in  mind  that  while  some  of  the  forms  can  be 
called  standard,  most  of  them  apply  to  specific  cases  only. 


197 


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(198) 


(Form  16) 


DATE 


458 


FINANCIAL  REPORT 
191 


S^l,  NlChol8  *  Co..  ,nc,  Bo*»        pARTICULARS 

AMOUNT 

CASH 

BANK  BALANCE  ON  NO. 

RECEIVED  THIS  DAY 

TOTAL  TO  ACCOUNT  FOR 

DISBURSED  THIS  DAY 

BALANCE  ON  HAND 

REMARKS 

ACCOUNTS  RECEIVABLE 

BALANCE 

CHARGES  THIS  DAY 

TOTAL  TO  ACCOUNT  FOR 

PAYMENTS  THIS  DAY 

ADJUSTMENTS  THIS  DAY 

BALANCE 

REMARKS 

ACCOUNTS  PAYABLE 

BALANCE 

INVOICES  ENTERED  THIS  DAY 

TOTAL  TO  PAY 

PAYMENTS  THIS  DAY 

ADJUSTMENTS  THIS  DAY 

BALANCE 

REMARKS 

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(204) 


SHOE  MANUFACTURING  ORGANIZATION 


205 


(Form  22) 

NAME 


.NO. 


2224-10-30.     Small,  Nichols  &  Co.,  Inc.,  Boston. 

DATE  EMPLOYED  WORK 


.DEPT 

RATE 
PER  WEEK 


DATE 

Change 
of  date 

ADDRESS 

AGE 


.MARRIED,    SINGLE,    NATIONALITY- 


PREVIOUS  EMPLOYMENT- 


REFERENCES 
APPEARANCE 


WAGES  EXPECTED. 
DATE  LEFT 


.DATE  APPLIED- 


CAUSE 


206 


SHOE  MANUFACTURING  ORGANIZATION 


(Form  23) 


INWARD  PASS 


No. 


This  Pass  must  be  presented  to  Foreman  before 

beginning  work.  Pay  will  be  reckoned  from  time  of  presentation  to  Foreman. 

Name No Dept 

Date 


3222-10-30.     Small,  Nichols  &  Co.,  Inc.,  Boston 


Received  by  Foreman 
Time 


Foreman's 

Signature— 


(Form  24) 

OUTWARD   PASS  No. 

This  Pass  must  be  presented  at  Office  before 

leaving  Factory.     Pay  will  be  reckoned  from  time  of  issue  by  Foreman. 
Name No. Dept. 

Date Received  by  Office 


Foreman's 
Signature  _ 


2222  A-10-30.     Small,  Nichols  &  Co.,  Inc. 


SHOE  MANUFACTURING  ORGANIZATION 


207 


(Form  25) 


ERRORS  ON  WORK  SLIPS 


NAME- 


-NCX 


-DEPT. 


2254-10-80  Small,  Kichols  &  Co.,  Inc.,  Boston 


CORRECTIONS  IN  PRICE 


WRONG  PRICES 

WRONG   NO.  PAIRS 

CASE  NO. 

FROM 

TO 

CASE   NO. 

PAIRS  ON 
SLIP 

CORRECT 
PAIRS 

PRICE 
ON   SLIP 

CORRECT 
PRICE 

THE    FOLLOWING    CASE    NOS.    ARE    NOT    CORRECT    FOR    REASONS    GIVEN    BELOW 


AND 

HAVE    BEEN    CROSSED    OFF. 

CASES    DONE    BEFORE 

NOT    SO    FAR    ALONG 

WORK    NOT    TO    BE    DONE 

NO    SUCH    NUMBERS 

TOTAL,  ON  SLIP 


CORRECT  TOTAL 


208      SHOE  MANUFACTURING  ORGANIZATION 

(Form  26) 

Lynn,  Mass., 1914 


f  Blank  Shoe  Co.    NO. 


100 
In  full  for  labor  to  


Dollars 


WAGES  VOUCHER 


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(209) 


210      SHOE  MANUFACTURING  ORGANIZATION 


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6 

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CONTINUOUS   CUTTING                                             (FormaoA) 
ENVELOPE           NO.      2035 

KIND  OF  STOCK                                                                       WIDTH 

BOUGHT  OF                                                                             PRICE 

LOT  NO. 

YARDS 

LBS. 

CUTTERS 
NAME 

POUNDS 
OFFAL 

CUTTERS 
NO. 

VALUE 
PER  LB. 

LABOR                         YARDS  OR  POUNDS 

MONEY 

TIME                                             GIVEN 

GROSS 
COST 

RATE                                            RET'D 

VALUE 
OFFAL 

COST                                            USED 

NET 
COST 

ALLOW                                       ALLOW 

ALLOW 

GAIN                                             GAIN 

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LOSS                                            LOSS 

LOSS 

1                                                                               r     ,                        .                    ,           r           , 

Small,  Nichols  &  Co. 

(212) 


(Form  30B) 


PATTERNS  &  PARTS 


PRS. 


INDEX 


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MONEY 
ALL'D 


Small,  Nichols  &  Co. 


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(216) 


Time  Taken 

(Form  34B) 


Small,  Nichols*  Co.,  Inc 


Shrinkage 


POUNDS 


MONEY 


Insole  and  Tap  Cutting  and  Sorting  No.. 


1052 


LABOR 


Name 


No. 


Time 


Rate 


Cost 


All'w 


POUNDS 


Kind 


Lot  No. 


Given 


Ret'd 


Used 


All'w 


MONEY 


Bought  of 


Price 


Cost 


Value  Offal 


Net  Cost 


All'w 


Time  Finished 


Gain 


Gain 


Gain 


Gain 


Gain 


Loss 


Loss 


Loss 


Loss 


Loss 


CUTTERS  RECORD 


SORTERS  RECORD 


CUTTERS  RECORD 


SORTERS  RECORD 


Style 


Sizes 


Prs.  Cut 


Solid        Gem       McKay      2  PC 


Style 


Sizes 


Prs.  Cut 


Solid       Gem       McKay     2  PC, 


Mens 
New 


6^ 

7_ 

8_ 

9^ 

10 

11 


Womens 


Mens 
Old 


Misses 


13 
12 


JL 
10 

11 
5 


Childs 


11 

10 

9 


Boys 


Infants 


Youths 


13 


L  G. 


11 
10 


Mens 
Middle 
Soles 


10 
9^ 

8 


LBS.  OBTAINED 


EVENING  INSOLES 


SORTERS  RECORD 


Cut  Stock 


Name 


No. 


Name 


No. 


Whole  He'l'g 


Time 


Rate 


Cost 


Time 


Rate 


Cost 


P'c'd  Heel'g 


2nd  Reading 
Meter 


All'w 


All'w 


Chips 


1st  Reading 
Meter 


Gain 


Gain 


No.  PCS. 
No.  PCS. 


Loss 


Loss 


(217) 


Small,  Nichols  ft  Co.,  Inc.  Boston 


(Form  35) 

TOP  CUTTING 


TAKEN 


RETURNED 


LBS. 

OR 

PAIRS 

MATERIAL 

ESTIMATED 

TOPS 

LOT  NO. 

LBS.        PRICE 

AMOUNT 

PRICE    VALUE 

PRICE        VALUE 

i  Rt;    COST 

LBS'    PER  IB 

STOCK  COST 

MATERIAL  VALUE 

GAIN 

LOSS 

LABOR 

TIME        RATE 

LABOR  COST 

LABOR  ALLOWANCE 

GAIN 

LOSS 

STOCK  COST 

LABOR  COST 

ESTIMATED  EXPENSE 

TOTAL  COST 

ESTIMATED  VALUE 

GAIN 

LOSS 

(218) 


SHOE  MANUFACTURING  ORGANIZATION 


219 


(Form  36) 


Heel  Department          siipNo.  511 


Lot  No, 
Cutter 
Date  . . 
Time  . 


Lbs. 
Given                          Lbs.  Received 

Whole  Heeling 

Sheet  Heeling 

Lea.  B'd  Heeling 

Lea.  B'd  Rand  Stock 

Lea.  Bd.  Wedge  Stock 

Split  Heeling 

Oak  Wedge  Stock 

Leather  Rands 

Skivings 

Whole  Lifts 

|  Heeling 

Chips 

Total 

Total 

220 


SHOE  MANUFACTURING  ORGANIZATION 


(Farm  37) 


Heel  Department 
STOCK  SHEET 


siip  NO.  755 


Date  Received 


Returned 


Whole  Lifts 

Half  Lifts 

Oak  Wedges 

Lea.  Bd.  Wedges 

Lea.  Board  Lifts 

Leather  B'd  Rands 

3-16  Heeling 

Whole  Split  Lifts 

Skiving  Lifts 

Cut  Rands 

Cemented  Rands 

Finished  \  Lifts 

Paste 

Nails 

(Form  55) 


KIND 


HEEL  BUILDING  H,  B»  NQ      564 


SORTER'S  COUNT 
SIZE 


PAIRS 

PERFECT 

HEELS 

PAIRS 

CHIP  PL  ED 

HEELS 

PAIRS 

DAMAGED 

HEELS 

TOTAL 

TOTAL 

TOTAL 

Small,  Nichols  &  Co.,  Ino.,  Boston. 


HEEL  BUILDING  H.  B.   NQ      565 


Kind 

Size 

Built  by 

Labor. 

Total  L 

bs,  Material 

KIND 
OF 
LIFTS 

LBS. 
LIFTS 
GIVEN 
OUT 

TOTAL 

RET'D 

USED 

PRICE 

VALUE 

PIECE  BUILDERS 

LBS. 

TIME 

TAKEN 

TIME 

RETURNED 

TOTAL  COST 

MATERIAL 

TOTAL  LBS.  PIECE  BUILT  HEELS 

PIECE  LABOR 

PRICE 

TOTAL  LBS.  PIECE 

TOTAL  COST 

PIECE  LABOR 

DAY  BUILDERS 

HOURS  DAY  LABOR 

RATE  PER  HOUR 

TOTAL  COST 

DAY  LABOR 

TOTAL  COST 

MATERIAL  AND  LABOR 

TOTAL  LBS.  DAY 

PAIRS  COMPLETE  HEELS 

GRAND  TOTAL  LBS. 

ESTIMATED  VALUE  PER  PAIR 

ALLOWANCE  FOR  DAY  LA  BOA 

TOTAL  VALUE 

DAY  LABOR         1  DAY  LABOR 
CAIN                          |  LOSS 

GAIN 

LOSS 

(221) 


(222) 


(223) 


224     SHOE  MANUFACTURING  ORGANIZATION 

Form  15,  Last  Order:  This  type  of  order  is  a  time  saver 
where  lasts  are  ordered  at  frequent  periods. 

They  can  be  made  in  duplicate  or  triplicate  as  desired. 
Some  concerns  also  use  a  similar  special  form  for  ordering 
patterns.  They  save  in  time  and  errors. 

Form  16,  Financial  Report:  This  form,  which  is 
generally  made  in  duplicate  or  triplicate,  may  also  have 
added  to  it  the  transactions  in  Notes  Payable.  These  re- 
ports should  be  made  daily,  and  are  really  more  than  the 
title  indicates. 

Through  them  an  executive  is  holding  a  controlling  ac- 
count over  the  detail  of  most  of  his  liquid  assets  and  liabili- 
ties. They  should  conform  to  the  ledger  balances  at  all  times. 

Form  17,  Order  Register:  This  is  a  very  useful  record 
for  the  manufacturer  who  sells  to  the  retail  trade. 

Duplicate  sheets  should  be  made,  the  copy  to  be  sent  to 
the  salesman  weekly.  It  saves  writing  letters  and  keeps 
him  posted. 

Salesmen's  order  books  should  be  numbered  with  num- 
bers of  three  or  four  digits,  the  first  one  or  two  at  the  left 
to  indicate  the  salesmen.  This  system  prevents  the  com- 
plete loss  of  an  order,  as  sometimes  happens  where  numbers 
are  left  to  the  salesmen,  who  frequently  forget  to  fill  them  in. 

Mail  orders  should  be  given  the  last  consecutive  number 
with  a  letter.  To  illustrate,  an  order  bearing  the  number 
5672  will  indicate  that  the  salesman  is  No.  5  and  that  the 
order  is  No.  672.  The  next  mail  order  received  should  be 
numbered  5672A,  this  number  to  be  continued  with  new 
letters  until  another  order  is  received  from  the  salesman. 

Form  18,  Shipment  Register:  This  register  corresponds 
to  Form  17  and  the  same  general  rule  applies  to  both.  The 
two  combined  give  the  salesman  all  necessary  information 
by  which  to  keep  his  records. 


SHOE  MANUFACTURING  ORGANIZATION      225 
ORDER  BLANKS  AND  FACTORY  TAGS 

While  no  forms  will  be  shown  here,  the  author  wishes  to 
state  that  many  errors  which  are  made  in  tag  writing  and 
shoemaking  are  directly  traceable  to  poorly  arranged  order 
blanks  and  tags.  Blanks  and  tags  should  always  be  ar- 
ranged in  similar  order  of  printing,  especially  where  all 
shoes  are  sold  to  be  made  special.  The  tag  arrangement 
should  follow  the  order,  thus  aiding  the  tag  writer  as  much 
as  possible. 

The  tag  should  be  so  arranged  that  workmen  can  readily 
see  what  they  are  to  do. 

Material  to  be  used  should  never  be  mixed  with  the  labor 
instructions,  but  each  should  be  separate. 

Form  19:  It  often  happens  that  a  customer's  order  is 
put  into  the  works  on  several  different  dates.  The  shipper 
gets  the  first  cases  without  knowledge  of  how  many  more 
are  to  come,  or  the  sheets  they  will  be  on.  When  the  ship- 
ping date  arrives,  he  does  not  know  where  they  are  stored. 
This  form  conveys  all  this  information  to  him  very  simply. 
The  adoption  of  this  system  has  saved  the  wages  of  several 
men  in  some  instances. 

Form  20,  Sorting  Report:  In  Chapter  7,  Report  No.  1, 
Upper  Material  shows  a  "Buying  and  Sorting  Gain"  of 
$1,274.34.  This  amount  could  have  been  taken  from  a 
recapitulation  of  records  kept  on  similar  forms. 

Form  21,  Sorting  Slip:  This  is  another  style  used  for 
the  same  purpose  as  Form  20. 

Form  22:  On  this  form  can  be  kept  a  history  of  an 
employee. 

Forms  23  and  24,  Inward  and  Outward  Passes:  These 
passes  are  quite  necessary  to  control  the  going  and  coming 
of  employees  during  work  hours. 


226     SHOE  MANUFACTURING  ORGANIZATION 

Form  25,  Errors  on  Work  Slips:  This  form  is  much 
used  to  notify  employees  of  errors  on  their  work  slips  which 
the  checkers  discover. 

Form  26,  Wages  Voucher :  The  best  results  are  obtained 
from  these  slips  where  they  are  filled  out  and  distributed 
to  the  employees  the  day  before  pay  day.  If  correct,  the 
employees  should  sign  and  return  the  slips,  exchanging  on 
pay  day  for  their  envelopes. 

Form  27,  Delayed  Production  Report:  Where  the 
Production  or  Sheet  System  is  really  operated,  no  delay  is 
allowed  to  occur  unless  a  report  is  sent  to  the  Production 
Manager. 

Form  28,  Damaged  Tag:  This  damaged  tag  is  made  in 
duplicate  and  the  instructions  for  the  repairs  to  be  made 
are  designated  by  using  a  punch,  the  original  and  duplicate 
tag  being  punched  at  the  same  time.  The  original  should 
remain  attached  to  the  shoe  so  that  the  inspection  depart- 
ment will  notice  that  it  has  been  repaired  and  will  give  the 
shoe  more  careful  inspection. 

Form  29,  Raw  Stock:  This  form  was  designed  to  show 
a  complete  record  where  several  shipments  were  received 
of  the  same  lot  of  stock.  Part  was  resold  and  part  manu- 
factured. The  result  was  all  on  one  record. 

Form  30,  A  and  B,  Continuous  Cutting:  Some  manu- 
facturers like  to  use  an  envelope  where  several  slips  can  be 
filed  until  a  lot  of  leather  is  cut.  The  perforated  margin 
is  then  removed,  the  envelope  flattened  out  and  the  results 
of  the  lot  entered  thereon. 

Form  31,  Sole  Leather  Sorting  Record:  This  simple  and 
easily  kept  record  was  designed  for  a  concern  which  buys 
only  cut  soles. 

Form  33,  Sole  Leather  Cutter's  and  Sorter's  Slip:  As 
indicated  by  the  name,  this  form  is  arranged  to  give  a  com- 


SHOE  MANUFACTURING  ORGANIZATION     227 

plete  record  of  the  cutting  and  sorting  on  one  sheet.  In 
Chapter  6  (Form  8)  is  shown  a  cutter's  record  by  itself. 

Form  34,  A  and  B,  Insole  and  Tap  Cutting  and  Sorting: 
The  manufacturer  for  whom  this  was  designed  wanted  to 
know  the  exact  cost  of  everything  he  cut.  By  the  use  of 
this  form  he  was  enabled  to  satisfy  his  desire  in  this  par- 
ticular. 

Form  35,  Top  Cutting:  The  company  who  use  this 
form  do  not  deceive  themselves  about  costs.  They  know 
what  every  part  costs  and  why.  They  know  that  it  is 
essential  to  have  the  cost  of  material  and  labor,  but  those 
two  items  are  not  enough  if  a  comparison  is  to  be  made 
with  the  price  at  which  an  article  can  be  purchased.  There 
must  be  an  expense  burden  added.  It  is  a  common  practice 
among  shoe  manufacturers  who  cut  their  own  soles,  insoles, 
etc.,  to  estimate  the  cost  without  adding  any  expense  burden. 
Neither  do  they  keep  accounts  to  learn  the  costs  of  the 
department  which  produces  these  parts. 

Forms  36,  37,  38:  These  are  heel  department  forms 
used  in  a  heel  factory. 

Form  39,  A  and  B,  Pattern  Chart:  This  sheet  was 
designed  for  use  in  factories  where  several  sets  of  quarters  or 
foxings  are  interchangeable  with  one  or  more  sets  of  vamps. 

These  interchanges  can  all  be  illustrated  on  these  charts 
so  that  it  is  possible  at  all  times  to  see  just  what  combinations 
can  be  worked.  Much  time  and  money  can  be  saved  in 
many  shops  by  using  something  of  the  kind.  Errors  will  be 
greatly  reduced. 

If  a  numbering  plan  is  used,  as  suggested  in  Chapter  16, 
a  pattern  number  will  indicate  the  kind  of  pattern,  and  also 
the  other  patterns  with  which  it  forms  combinations. 

On  the  reverse  side  (Form  39  B)  an  inventory  can  be 
kept  showing  the  number  of  pieces  and  their  cost. 


OVERDUE. 

'JTaswfc 


MAR  24  W* 


APR  16  1942E 


LD  2l-50m-8,-32 


SE  92695 


311478 


nr 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


